Accident & Health underwriters in London spent the middle of 2020 with teeth gritted, then heaved a collective sigh of relief. An enormous Covid-19-related loss, anticipated and feared by some, had not fully materialised. Claims emerged on certain travel and Specific Medical Cat treaties, but the pandemic didn’t deliver a multitude of catastrophic losses to this niche corner of the international speciality insurance market.

Now underwriters are thinking again. Some major insurance-buying parts of the world are opening up. Businesses in the US and UK particularly are being encouraged to return to something much more like BAU than has been permitted for very many months. As that happens, Covid concern is again an issue in the London A&H market. 

Covid covered

On the positive side, much, much more is known about the illness itself, and in many countries vaccination is reducing the severity of cases (if not the frequency). That means cover is relatively widely available for healthcare-related Covid expenses under corporate group policies backed by London underwriters, including coverage underwritten by the MGAs they support.

That said, it’s a limited inclusion. Potential loss accumulation from trip cancellation coverage is a big concern in the A&H market, so it may be carved out or excluded. Insurers are worried that a mass of cancellations could lead to an aggregation like the one that hit their fellow underwriters in the event cancellation market. They never expected that all the events they’d insured, from rock concerts to handball tournaments, would suddenly be cancelled everywhere in the world. A&H carriers want to avoid a similar hit. 

Long Covid’s long shadow 

Insurers are also troubled by the phenomenon known as ‘Long Covid’, sometimes called post-Covid syndrome. People with this lingering ailment suffer long-term health problems, even if their original symptoms were mild. Underwriting managers are concerned about the possible long-term effects of Long Covid, which might include heart and respiratory impacts. We probably won’t know with certainty for two or three years how severe these might be. 

So relief that the feared huge cost of Covid has not materialised is tempered. Underwriters remain cautious and concerned. Vaccines may not be the silver bullet that some have hoped – the economic reopening of the UK will be the first real-world test case – and the recent discovery that it is possible to be infected with multiple strains of Covid at the same time doesn’t drive complacency. So managements have continued to instruct underwriters to exclude cancellation coverage. 

Cautious relaxation

Fortunately for clients seeking cover as the world reopens, the best underwriters are beginning to further relax their exclusions. It is primarily the less-experienced underwriters who have been reigned-in by their managers. The traditional leading A&H underwriters at Lloyd’s, representing about a dozen syndicates that have had an A&H book for decades, are working with Miller’s A&H team daily to include full-spectrum Covid coverage, including trip cancellation. 

Because their own reinsurance coverage now excludes such exposures, they must remain cautious, and be very comfortable with any risk they assume. Some are writing smaller lines. All that makes the broker’s presentation of a risk more important than ever in this hardening speciality market. To learn about the scope of cover available, how best to present a given risk, and which underwriters have an appetite, please get in touch.

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