The consequential losses and the coronavirus.

Unfortunately for the affected companies, the vast majority of the consequential loss policies contracted do not cover the serious economic consequences generated by the coronavirus, since the condition of the policy that they are the consequence of material damage is not met.

In the few claims covered, there are Insurers that cover the consequences of contagious diseases, it will be necessary to take into account the conditions of the demand as a result of the pandemic, which will lower the compensation compared to a normal market situation.

On the other hand, it is evident that there will be rebates and premium regulations in 2020 as the vast majority of insured companies will have a decrease in their profits and fixed expenses with which they will have to recover part of the premium paid in their policies from BI/ CL. This is one of the jobs that insurance brokers will have to control massively as a result of the coronavirus.

The coronavirus and contingency plans.

In this pandemic, it was clear that we were caught off guard, since neither governments nor the vast majority of companies had contingency plans prepared. Businesses have generally reacted effectively and quickly implemented teleworking systems where possible, which are functioning satisfactorily. We think this form of work is here to stay, which will facilitate family reconciliation and as a consequence increase the productivity of companies.

Contingency plans, also called business continuity plans, which reduce consequential losses in claims, are more effective and useful than emergency plans that reduce material damage. Unfortunately, only a minimum percentage of companies have them established and implementing a contingency plan in their companies should be a priority target for risk managers.

A pandemic is not very foreseeable, but fires, machinery breakdowns, explosions… happen every day, hence the importance of contingency plans in companies.