IAIS Monitoring COVID-19 Impact on Global Insurance Sector

The International Association of Insurance Supervisors (IAIS) says it is monitoring developments and working with other standard-setting bodies to asses the impact of the COVID-19 pandemic on the global insurance sector.

Stressing the importance of the insurance industry to provide protection against the heightened uncertainties created by the COVID-19 pandemic, the IAIS said in a statement, "For insurers to play this role, and to contribute to economic recovery, the stability of the sector is vital."

Among the organizations with which the IAIS is coordinating is the Financial Stability Board (FSB), and the IAIS said it is committed to supporting the FSB's recently published principles for ensuring international cooperation and coordination of responses to COVID-19.

The IAIS said discussions of the supervisory responses to COVID-19 have highlighted the importance of effective policyholder protection and fair customer treatment during the pandemic.

"The IAIS welcomes the variety of proactive steps taken by insurance supervisors and insurers in support of policyholders," the organization's statement said. "Such efforts include implementation of alternative, non-face-to-face distribution and servicing arrangements, enabling flexible arrangements for premium payments, premium rebates and discounts on policies with significantly lowered risk exposure, and voluntarily enhancing cover/reducing premiums for essential workers."

The IAIS said that in instances where pandemic risks are covered, it's important that insurers pay claims promptly and efficiently. At the same time, the international supervisors' group cautioned against initiatives aimed at forcing insurers to retroactively cover COVID-19 losses such as business interruption that are specifically excluded in existing policies.

"Requiring insurers to cover such claims could create material solvency risks and significantly undermine the ability of insurers to pay other types of claims," the IAIS statement said. "Such initiatives could ultimately threaten policyholder protection and financial stability, further aggravating the financial and economic impacts of COVID-19."