India Inc not covered, but insurers could be hit

MUMBAI: Most corporates have no insurance protection against coronavirus, since an addon cover for business interruption has been avoided by them.
“The property insurance in India and globally excludes the non-damage risk for business interruption,” said Sanjay Kedia, managing director of Marsh India, the world’s largest insurance broking firm. In India, business interruption cover is sold in the form of a ‘loss of profit’ policy, which provides compensation for a shutdown of plant and machinery.
For individuals, their medical insurance policies generally cover all hospitalisations, barring those excluded. Insurers are also likely to face liability due to event cancellations.
According to Mohan C R, national head of property and risk management at Bajaj Allianz General Insurance, most of the ‘loss of profit’ policies will not be covering supply disruptions due to the virus outbreak.
Ratings agency Moody’s said that the impact of the coronavirus on global insurers would be only through second-order effects. In other words, they will lose money because of the fall in the value of investments coupled with lower business due to a slowdown. However, there will be some impact on reinsurers.
“We expect coronavirus-related critical illness claims to be limited because the Chinese government has undertaken to cover the cost of care and treatment for those affected. This is positive for the two biggest reinsurers, Munich Re and Swiss Re,” Moody’s said.
Insurance cover that would be triggered by death of the insured (‘mortality’ business) accounted for 40% and 42% of Munich Re and Swiss Re’s Asian life and health exposure respectively in 2018. This limits potential claims impact in the event of deaths related to coronavirus, said Moody’s.