News - 21/04/2020

Perfect storm as coronavirus hits insurance industry

Why insurance companies need to plan for their lockdown exit strategy now to mitigate problems in several months’ time.

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The Coronavirus pandemic is creating perfect storm for the insurance industry which, without careful planning, there is the potential to lead to a significant backlog of claims post-lockdown, according to our emergency relocation experts A3 Relocation Solutions.

Damage caused to properties as a result of flooding, fire, subsidence or natural disaster might require the occupants to be relocated to temporary accommodation to enable essential repairs and maintenance work to be carried out by the insurers.

Log-jam of cases

Analysis undertaken by A3 Relocation Solutions following the UK’s Coronavirus lockdown found that in 60% of the cases received since 23 March 2020, the policy holder has elected to remain in their own home until restrictions have been lifted rather than move out of the safety of their home into alternative accommodation.

The challenge for the entire UK contractors and builder repair network in being able to start works, whether as a result of social distancing measures, self-isolation or delays in obtaining the necessary building supply materials has compounded the situation.

Cases where works had already commenced prior to lockdown are also unable to be completed, resulting in policy holders having to remain in alternative accommodation for an extended period and further financial cost for the insurance company.

Shrinking supplier network

In a further blow, the accommodation market globally has shrunk dramatically following the temporary closure of all hotels, holiday lets, bed and breakfasts, and caravan outlets and parks, for commercial/leisure use.

All of which is leading to further alternative accommodation option challenges for the insurance industry, with caseloads mounting and estimated completion dates drifting.

Pierre Craddock, National Relocation Director at A3 Relocation Solutions, commented:

“We wholeheartedly support the Government’s response to combating the spread of the Coronavirus but there is little doubt that the social distancing measures are having a major impact on business, the economy and society as a whole.

“It goes without saying that all UK companies should consider and plan for their lockdown exit strategy to mitigate problems in several months’ time. The hotel industry will not come back on stream immediately and contractors will be in incredibly high demand when they are eventually brought out of furlough. We’re already looking at alternative and more efficient ways of partnering options to our clients. As part of a wider property focused organisation that can provide access to many skills needed to keep the contractor and building network supply chain moving (including project management and hotel agency), we can offer support on any building repair project to assist with the post lockdown workload and help reduce claim life-cycles.”

Need more help?

This situation and Government guidance is evolving daily and we will continue to update our clients as more details are unveiled. You can also visit our dedicated COVID-19 online resource hub for additional guidance.

In the meantime, should you have any specific concerns or requests please don’t hesitate to get in touch and we will do our utmost to provide you with the best advice during these unprecedented times.

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