Insurance without certainties

“The most difficult exercise that the insurance sector has experienced in a long time and in which everything is conditioned by the pandemic.” Pilar González de Frutos, president of Unespa, the Spanish Union of Insurance Entities, does not hide the concern of a group that represents no less than 5% of Spanish GDP, but which has seen its premium turnover reduced by 8.3% to stand at 58.85 billion euros. It does not seem like an amount to be ashamed of, and less with which it is falling, but it has in life and vehicle policies its main Achilles heel.

The scenario raises multiple questions for the future, although Unespa maintains that the insurance world has maintained its solvency and profitability during the pandemic, which would rule out adjustments to the detriment of citizens -95% of Spanish families have at least one insurance, the most common being automobile, home and death-. And this has been the case, points out Martín Navaz, president of the Spanish Association of Insurance and Reinsurance Brokers (ADECOSA), because «expenses have been reduced because there have been fewer claims, due to many factors, for example limitations to the mobility of people ”.

Is it sure then that there will not be an increase in prices given the situation? Not necessarily. González de Frutos warns in this sense of the pernicious effect that the rise to 8% experienced by the IPV, the tax on insurance premiums, recently approved in the Budget Law, will have. “And that will affect families and companies as it is an external surcharge, with the consequent risk that they will hire less, leaving them more exposed in the future”. A tax, remember the same sources, that does not affect health policies, savings (pension plans) or international transport.

Navaz points out. “Since 1997 this tax had not increased and now that it has, it is still one of the lowest in Europe, just look at Germany, where they apply 25%.” Another thing is that it is worth asking if this increase helps the sector at a compromised moment such as the current one -the answer is no- and if citizens expect to obtain a certain return when a service increases in price (of course it does).

The panorama does not exactly invite to be optimistic. To a scenario aggravated by the pandemic, there is now a disastrous start to the year in terms of meteorology, which will cause, experts estimate, a trail of damage and service demands. All this contributes to 2021 being the year that generates the highest demand for services in recent history, largely because Covid has exposed people to risks that they believed were controlled and that have now been unleashed, derived from hospitalization, illness, intensive use of housing, disruption in work, loss or cut of income to meet their payment commitments – mortgages, rents, bills – or the need for legal assistance.

The impact goes through neighborhoods

Not all branches of the business have suffered the onslaught of the crisis in the same way. Life insurance has been the most affected: its turnover had decreased by 20.78% at the end of the fourth quarter, an evolution referred mainly to the so-called savings contracts and which experts link to the fall in interest rates and the cuts in the deferred tax system that affects the insured pension plans.

The next biggest hit has been vehicle insurance, which has seen its premium income reduced by 2%. From Unespa they point out that the pandemic has not only slowed down mobility – during the first months – but also the evolution of the park. «Industry sources estimate that 300,000 more cars should have been sold this year. The consequences are obvious, because as a car ages, the coverage decreases: from all risk it goes on to contract franchises, and from there to only third parties ».

On the contrary, those who have best coped with adversity seem to be health insurances, which have not only seen their premium billing grow by 5%, but also assumed from the early stages of the pandemic the commitment to address incidents derived of the Covid, when no clause contemplated that coverage before March 12, the date on which the health alert was declared. At that start of the emergency, private health took care of 20% of the sick and 15% of the patients in the ICU, Carlos Hernández, SegurCaixa Adeslas commercial director, assured in this regard.

His contribution did not end there. Many companies came together to create a fund to provide life insurance to health personnel, the most exposed during the emergency, which covered death, disability or inability to work for a maximum of 30,000 euros. The game – of more than 37 million – will work until it is finished and, in the meantime, it will be subjected to successive extensions. When the danger disappears, the commitment is to destine what remains to investigation.

This is no time for bragging

According to a report on the implications of Covid for the sector prepared by the consulting firm Deloitte, Covid is affecting the insurance industry in multiple ways, “from business continuity problems, financial statements and cash flow to customer service. customers ”, which has now experienced an unprecedented rise in telesales or video inspections, and which opens up new challenges such as cybersecurity and technological acceleration, highlights José Gabriel Puche, partner of the firm.

The diagnosis of the consultancy advises the development of new products, an extreme that does not seem to have penetrated the sector at the moment, waiting for the situation to improve to show off. So believes, at least, Martín Navaz, who now certifies “The lack of coverage derived from the Covid”, although he does not doubt that as soon as the tables turn, they will grow exponentially. “It does not make sense, for example, to take a product out for events when they have not been held for a long time and if they do, it is for a limited capacity”.

Of course, there are exceptions. Axa is one of them. Last August, it signed a travel assistance policy with the Canarian Government to cover all tourists, whether nationals or foreigners, thus becoming “the first insurer that covered medical expenses, health repatriation and extension of quarantine stays”. they assure from the company.

The company also decided to include telecare for the elderly in home insurance and to do it free of charge, a measure that it made available to more than 900,000 clients. To use the service, it was enough to have a landline or a mobile phone to install the terminal. Also Mapfre, where appropriate a free post-covid health care service for those who have contracted health insurance with them, available from December 21; or tests for the detection of the virus.

A mattress to go on a trip

From Legalitas, legal assistance insurance, they point out that they have not released new products, but they note a strong increase in inquiries, especially those related to labor matters -with millions of people immersed in employment regulation processes-, 28.7 %, housing or consumption. Questions referring to topics as diverse as the payment of rents, the cancellation of events or the suspension of weddings, when one adds to the natural disgust questions such as: “And now, who pays for the catering?”

Also to travel departures. Imagine that you want to plan a trip to New York in the summer, but you do not know if the health emergency will have given a truce by then. What to do? Jump in the pool and cross your fingers? Inmaculada Murillo, a lawyer in the Consumer Department of Legalitas, tries to shed some light on this issue. “As for the hiring, the most important thing is that it be a trip that can be canceled free of charge (sometimes, paying a supplement to enjoy this benefit). For this, it is not necessary to have insurance, it is enough to introduce a clause with the possible causes of suspension.

If even so, the client wants a policy, be careful, because the causes of cancellation are assessed. Icíar Losada, also from Legalitas, goes further. “Hiring insurance is not always a guarantee of recovering anything, especially in relation to Covid, because most policies exclude pandemics from their coverage. It is also important to distinguish the insurance we take out: a cancellation insurance is not the same as a trip insurance, which protects in case you fall ill or if your suitcase is lost at your destination ». Any precaution is little, especially when someone seeks to make up for a year of nightmare.