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Coronavirus Raises Fears Of Increase In Insurance Fraud

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Welcome to iLeads Insurance Market Minute, where we bring you the latest, most relevant news regarding the insurance market. Last week you were reading Has Lloyd’s Just Found The Answer For Pandemic Insurance Cover?. This week we’re bringing you:

 

P/C insurers report a sharp decline in first-half net income: A.M. Best*

U.S. property/casualty insurers reported a 21.6% decline in net income to $25.0 billion in the first half of this year, as realized capital gains fell $5.5 billion amid the COVID-19 pandemic, A.M. Best Inc. said in a report Tuesday.

Premium credits issued to policyholders in the second quarter due to pandemic-related exposure declines because of stay-at-home orders and government-ordered business closures pushed P/C insurer underwriting and dividend expenses higher in the first half, A.M. Best said.

The P/C industry’s first-half underwriting expenses rose by 5.5% as some insurers recorded policyholder credits as an expense rather than a premium reduction, Best said. Read more in-depth here.

 

Insurers expect higher returns post-pandemic*

The coronavirus crisis appears a rolling nightmare for the insurance industry as it is assailed by huge claims and locked in damaging legal fights with customers.

But in recent months investors have quietly poured billions of dollars into insurance companies, betting the pandemic will ultimately prove the catalyst that ends a period of fallow returns for the industry.

Their calculation is simple, if risky, one: the wave of claims from the pandemic won’t overwhelm insurance companies but will allow them to justify hefty price rises for new policies.

It is the pitch insurers have been making this summer to pension funds, private equity houses, and sovereign wealth funds as they seek funds to back new business. Read more in-depth here.

 

Coronavirus raises fears of an increase in insurance fraud*

As if the insurance industry didn’t have enough to worry about amid the coronavirus pandemic, from how business interruption coverage lawsuits will be decided to how long term remote working arrangements will impact insurers’ services, they also have to keep an eye out for an uptick in insurance fraud. After all, hard economic times often bring about an increase in fraud, including more opportunistic fraud, such as policyholders faking claims or exaggerating the nature of a loss, as well as a potential increase in liability and casualty fraud as businesses, come under greater stress.

“The last three or four months when [the pandemic has] created economic instability in our country and around the world, it has also created, unfortunately, some desperate and opportunistic circumstances, so we see an uptick in fraud, particularly on the auto side,” said Mike Flato, chief claims officer for Liberty Mutual, during a Q&A on the future of insurance at the Connected Claims USA virtual summit. Read more in-depth here.

 

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