The General Arab Insurance Federation (GAIF) has warned insurers to take care when they consider removing any exclusions from insurance policies, adding that there is 'no free lunch' in the market.
Mr Chakib Abouzaid, GAIF secretary general, in a message to those responsible for the pricing and issuance of insurance policies, said that nothing is free, adding that insurers can provide coverage for COVID-19 but with an additional insurance premium, according to a report by Al Mal.
He stresses the need for Arab insurance companies to work hard and smart to meet the aspirations of their customers without prejudice to their contractual obligations. He says that insurance institutions must respond quickly and communicate well to gain the respect and understanding of customers.
He calls on underwriters to know and apply the most appropriate provisions of insurance policies, so as to protect the interests of their insurance companies and their clients.
He cautions insurers against removing some of the exclusions found in insurance policies and adding free coverage that could lead to potential claims, as has already happened in some countries since the emergence of the coronavirus crisis.
He adds that the risk management of insurance companies requires ensuring that their customers are adequately protected, in addition to the right of insurance companies to receive a premium for additional coverage.
General insurance companies face a turning point
Mr Abouzaid points out that the current controversy regarding the coverage of epidemics against the backdrop of the current pandemic is a turning point for all accident and civil liability branches of insurance companies.
He notes that the authorities in some countries are attempting to find a way for insurance companies to fund the cost of medical care for those infected by COVID-19 despite the exclusion of pandemics in insurance policies.
He added: "They are trying to impose on insurance companies retroactively the idea of ??including epidemics (in insurance cover) and thus get insurers to compensate for losses, although there is no evidence that the risk is included in the insurance policy."
He states that in this, insurance companies face a risk that can lead to significant losses for them as well as for reinsurance companies, because of the pressure being exerted for insurers to bear pandemic losses. Care must be exercised, he advises.
He expects that insurance companies will face decreased investment returns as well as an accumulation of claims, which will affect the level of solvency, as a consequence of the pandemic.
He stresses that the presence of a strong insurance industry is vital in every country, noting that governments, institutions and regulators are keenly aware of this fact.