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Published in Asia Insurance Review.

A new social ecosystem and work environment is emerging as society deals with the pandemic. Insurance, too, will be transformed. co-founder Kapil Mehta said, “There will be a significant shift in the insurance covers.
“Offices and factories were non-operational and unoccupied for long periods and subject to significant silent risks during this period. As we grapple with the pandemic, such periods when the company is not operational could again arise.”
Mr Mehta said, “Most current insurances lapse if the premises are unoccupied or not functional for a certain period. These covers should evolve to maintain a minimum protection even during these silent periods.”

The pandemic has also changed the concept of work and office. Today many people work from home (WFH) with office infrastructure including computers and data.
“Property and liability insurance will assume a different scope and will need to be expanded to cover these new risks. It will no longer remain restricted to a few designated offices,” he said.
As WFH gets embedded in the work-culture of most of the corporates, especially in the services and IT sector, new risks will emerge, the nature of risks will change, and as a consequence we can expect cyber risks and data
leaks to become major issues.
“Cyber risks have generally been covered by standalone insurance covers but should now find a place in all-risk covers because many companies will want to buy just one insurance to cover property and liability.”
On cyber crime Mr Mehta said, “As digitisation gathers pace it will result in more cyber crime. However, I encourage this shift to digitisation because the benefits are likely to far outweigh the risks.”

Increased awareness of cyber crime and development of better technology and reskilling of employees plus suitable insurance covers can also help in countering rising cyber crime levels.
“Much cyber crime insurance is bought as a contractual requirement of overseas customers and is often
a tick-the-box insurance. Currently cyber crime insurances have several warranties and exclusions which
keep claims low.”

Concept of employment has changed

With respect to the employment scenario, things are dynamic at the moment. While enterprises like Uber
and Ola are staring at a downturn and laying off scores of employees, some like Amazon are recruiting
temporary workers in large numbers.
Mr Mehta said, “From an insurer’s perspective, these changes will require different types of protection
covers. Employers of such a new class of employees or (temporary) gigworkers will have to provide them
with suitable insurance covers.”
The challenge in providing company-sponsored insurance to gig workers is that it should not create a case for permanent employment. A driver provided with a comprehensive group health insurance could argue that they were a de facto employee because these kind of covers are given only to full time employees. Hence, companies
will tread carefully.
“The first set of insurances that I think will develop will cover gig workers only when they are providing specific services. For example, a delivery person only when on work for a company or a freelancer only for the specific
projects they do,” said Mr Mehta.
Practically, providing such insurances is complicated because keeping track of when the gig worker is on or off work, will require technological inputs. It will also have to be made explicitly clear by all employers of gig workers that these are non-employee insurances to prevent employment claims from coming up.
Mr Mehta said, “The insurers could offer insurance policies that provide cover to such temporary and gig workers across industries, especially if the nature of duties being performed are similar and they could buy these on their own. These products are, however, not standard yet.”
“There is likely to be an increase in employee-related litigation as well. This is because such large numbers are being laid off and also because monitoring productivity and effectiveness when most employees are working from home can be contentious.”

D&O liability insurance needs a new look

Independent directors who work on the boards of several companies are also not permanent employees of the
respective companies but they are also not gig workers. Mr Mehta said, “Today the directors on boards of companies do not have products that cover them for liability across all the boards they sit on. Insurers look at the risk from the company’s standpoint and only a company can buy liability insurance covering directors.”
“I feel the entity employment practice extension in the directors and officers liability insurance should
become a core offering rather than an extension,” he said.

Concept of business interruption must change

Business interruption (BI) and loss of profit insurance policies cover only interruptions caused by physical damage or certain specified perils. These perils do not include pandemics. In that sense, loss of profit due to a lockdown is not admissible at present.
Mr Mehta said, “This, however, must change because the pandemic has exposed us to a risk that we had
underestimated in the past – that of a government-mandated lockdown or health condition that prevents
regular work.”
He said, “The challenge will be to develop these products costeffectively. The perceived risk of the pandemic is so high that most insurers will price such insurances out of reach, certainly for the small companies that need it most.
Reinsurers will have to leverage their experiences to introduce products and support insurers.”

Public liability and consumers
Public utilities will be another area that will have a lot of ambiguity around where the public liability for
such viral infections and pandemic risks lies.
Mr Mehta said, “Public transporters will try to transfer this liability to individuals through declarations made by the travelling persons and individuals will push back saying that public utilities are maintained through tax money and have a responsibility to maintain hygiene and safety.”
He said, “Awareness of liabilities will increase and I expect much more demand for liability insurances both
from the suppliers and consumers.”

Motor and travel insurance will need to be reformed

Motor insurance has been a beneficiary of the pandemic because travel has significantly reduced. Both
third party and own damage claims have fallen with little reduction in premium. For insurers, this benefit
does get offset by reduced business in other areas.
Mr Mehta said, “In the days ahead, the structure of motor insurance could change as people travel less.
The pay-for-use insurance model has often been discussed but has been difficult to widely implement
because the price advantages were not significant. Now the industry will be forced to confront this issue
and think about fair pricing of motor insurances.
“Also, the liability portion within motor insurance is currently limited to third party liability and small
amounts of passenger liabilities. This will increase since liability cases by passengers travelling commercially
will go up.”
Mr Mehta said, “COVID-19 has exposed some shortcomings of travel insurance. These include inadequate
compensation in quarantine situations, and difficulty in extending the insurance beyond a certain number of days if you are stranded overseas. Insurers can introduce variants that address this issue by allowing longer travel periods and extensions and covering nonhospitalisation medical costs.”