Difficult conditions for the sale of life insurance
The first lockdowns were already imposed in spring 2020 and with them came the difficulties for insurance agents as well. Because the measures made their tasks much more difficult, for example they could no longer speak directly to customers. But this is exactly a crucial point when selling life insurance: Potential customers want face-to-face discussions, want to ask questions and seek all-round advice.
In theory, this can also be done on the phone, but in practice it is rarely handled in this way. The uncertainty of customers is great in view of a long-term contract and many do not want to rely solely on Internet information or information on the phone.
The first evaluations of the sale of life insurances by Zurich Versicherung then also provided evidence of the break-in. The annual premium equivalent collapsed by around a fifth in the first nine months of 2020 and was only USD 2.57 billion. The reasons for the slump were the restrictions that had to be accepted in several markets and which can be attributed to the Corona crisis.
From a global perspective, however, the insurance business has grown or the decline has been limited, because growth of around seven percent in the third quarter partially offset the decline from the first two quarters.
Better claims business for insurance companies
The sale of property and casualty insurance, on the other hand, is significantly stronger than that of life insurance. The gross premiums here grew by around three percent in the period from January to September 2020. This growth was even faster than analysts expected. On the one hand, the globally increased premium rates were blamed for this.
In North America, for example, Zurich Insurance was able to achieve 18 percent higher premium rates. In Europe, too, the premiums were raised in the double-digit range.
At the same time, people's interest in liability insurance increased, which also caused prices to rise.
However, the greatest growth on the part of insurance companies was recorded by SMEs, because business with private customers was sluggish or only slight increases in profits were recorded. However, the demand for travel insurance declined in the face of numerous travel bans and entry restrictions.
Expected high load
High charges are expected not only at Zurich, but also at other insurance companies. Due to the Corona, high demands are made because of canceled trips, and SMEs also approach insurers with demands for business interruption insurance.
However, this is where the insurers differ, as some have reduced coverage for business closings or removed them entirely from the catalog of benefits. However, insurers could also face higher burdens due to the severe weather damage caused by hurricanes and other weather events.
Overall, insurers have so far been satisfied because their balance sheet remains well capitalized. In any case, this is the way Zurich Versicherung expresses itself, which is optimistic about the dividend policy.
Conclusion: higher damage, but good status of the insurers
In summary, it can be said that insurers are doing less badly in 2020 than feared. Even if they have been able to sell fewer life insurance policies and other products for which customers prefer personal advice, the claims business is still lucrative. On the one hand, higher damages have to be settled here, which is mainly the case due to necessary business interruptions and the resulting claims.
On the other hand, the desire for coverage is growing and more companies are taking out liability insurance. Private individuals also want all-round insurance and are more likely to opt for liability insurance. Contrary to expectations, the insurers could end this year with higher sales and profits than expected.
