The Algerian Union of Insurance and Reinsurance Companies (UAR) has created a think tank which is currently examining the possibility of setting up a mechanism that would cover exceptional crises such as the COVID-19 pandemic, its president, Youcef Benmicia, said.
n an interview with El Moudjahid, he said that for insurers, the global spread of a new disease means that insurers are facing an exceptional disaster, which insurance as practised around the world cannot cover because it does not meet the criteria of the insurability of risk.
The situation has led the UAR to create a think tank which is currently examining the possibility of setting up a mechanism that would cover exceptional crises like that of COVID-19, he said.
“The scale of this disaster which surprised the whole world showed that insurance alone cannot cope with the consequences of this crisis. This is why, when setting up this group, guidelines and avenues for reflection were discussed, in particular the type of cover, the insurance contracts which it would back, the policyholders concerned, the reinsurance mechanisms and state intervention,” Mr Benmicia said.
The results of the work of this group will be used by the UAR and a proposal will then be sent to the public authorities, he added.
Mr Benmicia said that the COVID-19 crisis has affected insurers and also policyholders. While insurers saw their turnover decline by nearly 14% in the first half of 2020, they also suffered an increase in unpaid premiums due to the difficulties encountered by insured companies following the cessation of activities and cash flow worries. On the other hand, the freezing of various operations, be they transport, tourism, production or shops, resulted in a decrease in claims reports, which fell by nearly 15% in the first quarter of 2020.
Policyholders who have suffered revenue losses, especially companies whose activities and cash flows have been severely affected, have not hesitated to ask for the suspension of payment of premiums. Insurance companies, for their part, were keen to support policyholders during this difficult period by granting time extensions for the payment of due premiums.
Mr Benmicia said, “Regarding claims for operating losses linked to the pandemic, to our knowledge, there have been no claims. It should be noted that the damage policies on the market do not provide for this type of risk and companies that have taken out operating loss policies are well aware that this insurance comes into effect following material damage such as fire, machine breakdown or other accidental event.”
Source MEIR
