Covid-19: Co-op and mutual insurers respond to crisis

Insurers face a tough year with an increase in payouts and investment losses from the pandemic.

Mutual and co-operative insurers are helping members to cope with the pandemic, including in the UK, where the Financial Conduct Authority (FCA) is advising them to consider payments on claims they might usually reject.

Interim CEO Christopher Woolard said: “Customer behaviour is changing. We expect insurance firms to recognise this and treat their customers fairly, recognising the circumstances customers may find themselves in. We would not expect to see a customer’s ability to claim affected by circumstances over which they have little control.”

Martin Shaw, chief executive at the Association of Financial Mutuals, said the FCA’s statement was “a sensible and appropriate reminder on the expectations of insurers at the current time”.  

He added: “The particular issues for our members include having effective plans for operational resilience, maintaining an effective standard of customer service, being fair at renewal, and being clear what a new product does and doesn’t include. 

“As insurers come under further pressure to treat customers fairly, we are looking for more and regular communication from the FCA, and PRA on their expectations and how we are jointly rising to the challenges of supporting customers and society at large.”

A number of UK co-operative and mutual insurers have reassured members they will continue to benefit from their existing policies but have stopped selling some policies.

Related: Finance co-ops and Covid-19

The National Farmers Union Mutual, which runs over 300 agencies across the UK, reassured members about its commitment to maintaining service levels while ensuring staff to work from home to reduce transmission risk.

“NFU Mutual has been serving its members through thick and thin for more than 100 years, and we wanted to reassure you that we will continue to do so during these very challenging and unprecedented time,” it said. 

NFU is publishing a regular market update for members, looking at the factors that might impact their investments.

The largest mutual insurer in the United Kingdom, Royal London, is also publishing a market update for members worried about the value of their pensions.

Barry O’Dwyer, group chief executive, said in a statement on the mutual’s annual results that Royal London had a successful 2019 despite political and economic uncertainty. He said around 98% of Royal London’s active funds outperformed their three-year benchmark.

“Coronavirus represents a new risk for the world economy and, therefore, for our business,” he said. “Our current priority is the health and wellbeing of our colleagues so that we can continue to deliver for customers and clients. Our robust capital position means we do not expect the virus to have any material long-term impact on our business.”

The Medical Defence Union (MDU), whose members are doctors, medical students or other healthcare professionals in the UK, provides professional indemnity against claims for clinical negligence.

On 20 March it announced its support for retired members with a package of benefits to help them return to work during the Covid-19 outbreak.

The General Medical Council said it expects the government to ask it to give temporary registration to 15,000 doctors who left the register or gave up their licence to practise in the last three years.

MDU support for retired doctors returning to practice includes free membership, regularly updated medico-legal advice about the Covid-19 outbreak and expert medico-legal guidance on our advisory helpline for members who have individual queries.

Dr Matthew Lee, MDU head of professional services, said: “The package of support we have announced is aimed at allowing returning doctors to focus on their key role during the outbreak. Members can be reassured they can call for advice at any time and we are there to support them if medico-legal issues arise.

“Retired doctors coming back into practice will be indemnified for claims by the NHS but may need support with other issues such as complaints or coroners’ inquests. MDU is on hand to answer medico-legal queries and we continue to provide a high level of service.”

Some insurers are also helping their local communities. Italy’s Unipol Group has allocated €20m to help the most severely affected areas of the country. The funding will be used to increase the number of beds in hospitals, especially in intensive care and semi-intensive care units, and to buy healthcare equipment to help stop the disease from spreading.

Of this, €6m will be allocated to purchase of ventilators and consumables such as face masks, protective suits, disinfectants and instruments. And there will be a new emergency facility in the Fiera Milano City pavilions, a 400-bed hospital devoted to intensive care and semi-intensive care.

Unipol is working closely with the local authority in Lombardia and it is also supporting the Emilia Romagna region, to which it donated €5m. This will go to a new 90-bed wing at the Sant’Orsola Hospital in Bologna, with 44 beds devoted to intensive care and semi-intensive care; and to establish a new 88-bed facility at the Bellaria Hospital in Bologna, with 73 beds devoted to intensive care and semi-intensive care. Some of the funding will also go towards further developing the hospital’s emergency department.

Medical and paramedical staff requiring accommodation have been offered accommodation the Unipol Group hotel chain, Gruppo UNA in Milan and Varese. The UNA Hotel in Bologna-San Lazzaro was made available for the Emilia Romagna region.

In terms of its own members, the mutual has confirmed that the coverage offered by its health insurance policies also covers coronavirus and extended the daily allowance to any insured parties put into quarantine at home after testing positive for Covid-19 at no additional cost. 

The group is also giving a daily allowance of €100 and €3,000 to any employees of companies subscribed to the coverage who need intensive care.

In Sweden, mutual insure Folksam Group has invested SEK 700m in a social bond issued by the International Finance Corporation (IFC) to provide financial support to companies affected by Covid-19. Folksam Group is a member of the International Co-operative and Mutual Insurance Federation (Icmif).

Ylva Wessén,  president and CEO of Folksam and a member of the Icmif board, said: “At the Folksam Group, we are trying to do everything possible to run our business safely for our customers and employees. Our customer service answers calls, our claims regulators take care of our customers’ injuries and we continue to insure new customers.”

Another Icmif member from Sweden, Länsförsäkringar, has invested SEK 300m in the social bond issued by the International Finance Corporation (IFC) to help tackle the crisis.

Kristofer Dreiman, head of responsible investments, said: “In the long term, private capital can complement public investment and help secure jobs and reduce the health/economic effects of the virus outbreak.” 

Insurers face a tough year with an increase in payouts and investment losses from the pandemic. Mr Shaw says mutuals tend to be more conservative in their investment portfolio, with a lower proportion of high-risk equities. 

“As the stock market has fallen by a third in the last month, this will increase their resilience, but even mutuals are being careful about the nature of new business they take in, preferring to focus on looking after their longstanding customers first,” he added.

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