It takes 20 years to build a reputation and five minutes to ruin it,” industry sage Warren Buffett once warned.
Several major industry brands have seen their reputation under attack during 2020 amid ongoing disputes over the validity of business interruption claims related to Covid-19.
At least in the short-term, perceptions of the industry have been damaged by the belief insurers are reneging on their promise to pay in the event of claims.
Many insurers will point to exclusions within wordings, but these are often clouded by ambiguity.
As another longstanding industry figure, Stephen Catlin, pointed out during the first of The ReInsurer’s virtual panel discussions, some of the industry’s comments related to the disputes have been unfortunate.
“You cannot say ‘I never intended to cover this and I’m not paying the claim’ if the contract wording says you do cover it,” Catlin pointed out. “We should recognize we were clumsy and make sure we are not as clumsy in the future.”
The validity of many of the disputed claims is still being tested within courts of law and it is too early to pass judgment on the outcome (we should get greater clarity in the UK later this month when the High Court delivers its verdicts in the FCA test case).
That such claims were subject to such a high level of disputes reflects the ambiguity of contract wordings and central to the conversation at last week’s virtual panel was the need for clarity of wordings.
Amid the negative publicity, the industry is in the process of paying out billions of dollars of claims and playing its role in helping society get back on its feet during a period of economic turbulence that is unprecedented in recent history.
As is often the case in the aftermath of major loss events, the (re)insurance sector has struggled to communicate this to the outside world which has instead only seen the negative stories about refused payouts and claims disputes.
There is no easy solution to this challenge, but the senior executives at our virtual panel discussion were all in agreement that the industry must better communicate the value it creates for society.
Without insurance, many of the things we take for granted (or at least did until Covid-19 placed us all in lockdown) would not be possible. And as its #REinsuranceMonth, we should also remember that these things are not possible without the support reinsurance plays in allowing primary carriers to enable economic activity.
Alongside better communicating its value proposition, the sector will also need to further engage with governments as the world continues to re-emerge from Covid-19.
Public-private partnerships will play a critical role in economic recovery. While the industry’s finite capital position means it cannot cover every risk, it can lead governments in helping them manage their liabilities.
(Re)insurance expertise can provide the catalyst for a more resilient society. Our virtual panelists all spoke of their desire to make the world better and the societal value the sector provides.
The industry will need to be on the front foot as we emerge from Covid-19 if this message is to finally reach the outside world.