INSURERS are looking at introducing products to address the needs of consumers affected by a pandemic like the coronavirus disease 2019 (COVID-19).
The Insurance Commission (IC) said its survey showed many companies are willing to design products focusing on pandemic-related concerns of consumers.
However, the commission said developing a specific product for pandemic coverage will be difficult as its risks are “very unpredictable.”
“In a survey we conducted, a number of insurance companies are willing to cover pandemics. How they’re going to do that remains to be seen because pandemics in their nature are very unpredictable,” IC Commissioner Dennis B. Funa said in a press briefing at the 23rd ASEAN Insurance Regulators Meeting on Monday.
To reduce risk, industry groups said the government and private firms still need to collect and analyze data on the impact of COVID-19.
“This needs the collaboration of the government to come with historical data in order to create a product that can be sustained in the future. This is something that’s possible but we remain to be very cautious, otherwise it will create a systemic problem to the industry,” ASEAN Insurance Council Secretary General Evelina F. Pietruschka said.
The Philippine Insurers and Reinsurers Association (PIRA) agreed, saying the unknown risks are likely too high and may lead insurance firms to insolvency. It said simply shouldering medical costs for COVID-19 can help firms avoid potential losses.
“Some countries already provide some level of pandemic coverage. Maybe that’s the way to go to limit the amount of liability so when a pandemic hits, it doesn’t damage the solvency of companies,” PIRA Chairman Allan R. Santos said.
Mr. Funa said the second quarter earnings of the insurance industry likely declined as consumers tightened their budget.
Insurance officials said historical data will help firms determine further product prices and benefits for those affected by the new virus, especially business clients.
“There is non-availability of data as a basis for pricing. In the future, this is something we can look at and talk about business continuity insurance and unemployment insurance. We need to give ourselves time,” Philippine Life Insurance Association, Inc. Data Protection Officer George C. Mina said.
Mr. Mina said the association and the National Task Force on Climate Risk Insurance have started discussing possible pandemic-related products.
“The task force is starting to make strides on how possible product development can be done and in what form it can be offered,” he said.
The need for pandemic insurance stemmed from financial losses experienced by various companies, especially small and medium enterprises, due to the pandemic.
Trade Secretary Ramon M. Lopez said that all of the estimated 1.5 million registered micro, small, and medium-sized enterprises (MSMEs) have been affected by the crisis.
He said an estimated 6% or 90,000 MSMEs remain closed, either temporarily or permanently, based on a survey of just 3,000 businesses. — K.K.T. Jose