The COVID-19 pandemic has led to the temporary disruption of about 43% of small businesses in the U.S., along with a 40% decrease in the employment rate, as reported by the U.S. Proceedings of the National Academy of Sciences (PNAS). Many businesses cannot reopen, while Americans who lost their jobs have resorted to filing unemployment claims. For instance, in March 2020 alone, there were over 6.8 million COVID-19-related unemployment insurance claims, as reported by Statista.
Here’s a look at four COVID-19 insurance trends in the U.S.
A Rise in COVID-19 Insurance Claims
The COVID-19 recession has led to many businesses being closed, people getting sick, and still others ending up jobless. This has been a rough patch for most people, with one in ten Americans borrowing money at least once for daily expenses, as reported by CBNC News. The loss of lives and money during the pandemic has also caused an increase in the number of life insurance claims and business interruption claims. Unfortunately, insurance companies have refused to pay for business interruption claims arising from COVID-19 as, according to them, the virus didn’t cause any covered property damage. Hence, business interruption policies will not cover losses resulting from viruses, as reported by the American Property Casualty Insurance Association (APCIA).
Life Insurance Sales Have Gone Up
So far, more than 230,000 Americans have succumbed to COVID-19, with more than 8 million still battling against the virus, as reported by Statista. This has created much fear in people, making them consider life insurance options. The second quarter of 2020 witnessed a panic buying of life insurance policies, representing a 2% increase from 2019, as per the Life Insurance Marketing and Research Association (LIMRA). According to CBNC News, Google searches on life insurance also increased by 50% from March 2020.
Possible Future Changes in Insurance Premiums
The Kaiser Family Foundation (KFF) stated that the COVID-19 pandemic might impact the health insurance rates in 2021. Some insurance companies expect fewer claims in the coming year with the expected availability of vaccines. Other insurance carriers also expect the cost of health insurance claims to go up due to the continued testing for COVID-19 vaccines. As a result, the net change in the insurance premiums will be zero, although there’s still not enough evidence to ascertain this theory. Even so, some insurance companies are ready to add the COVID-19 vaccination cost to their health insurance package in the coming years.
Stringent Life and Health Insurance Underwriting Procedures
To reduce their chances of losing money, health-related insurance products typically exclude pandemics and epidemics. For example, the widespread COVID-19 pandemic has significantly increased the risk of people in the U.S., with older people and those with pre-existing conditions being more vulnerable to the virus, as per the World Health Organization (WHO). Some insurance companies are temporarily denying applications from people 70 years and above while postponing applications for those with recent travel history. Besides, they are only offering policies to people who complete a statement of good health.
Since the business interruption policy doesn’t cover COVID-19 insurance claims, you should purchase additional insurance coverage for your business. If you are looking for a commercial insurance policy, contact our experts at Pittman Insurance Group, LLC. Our dedicated team is willing to assist you with all your coverage needs.