How Is COVID-19 Changing Actuarial Tables?
2020 is destined to be a year of disruption for practically every industry that relies heavily on forecasting in one way or another, and insurance is definitely no exception. In addition to the obvious strains that a pandemic places on the medical system, the structural behavioral changes of individuals and companies for the duration basically require insurers to throw their actuarial estimates out and start over with new assumptions. The question then becomes, what is known about changes to people’s risk-taking behavior? What can’t be known because of the unpredictability of the situation?
Analyzing Changes To Social Behavior
In an age of social distancing, travel is heavily deterred for most people. According to ProgramBusiness, this means it’s fairly safe to assume accident claims will go down. Depending on the level of social restriction in place, the impact could be profound or small. There’s also the question of commercial traffic because there is a chance that delivery services will be more active. Even so, the experts believe that auto policy risks will be reduced for the duration. They also predict major changes in several other insurance niches:
- Workers Compensation
- Commercial Property Policies
- D&O Insurance
- Surety & Credit
- Cyber Coverage
- Employment Liability
This could have profound effects on rates going forward for the duration of the pandemic due to the movement restrictions and personal safety recommendations that are in place and will be for the foreseeable future. It’s time to be responsive as an insurer and as a business with insurance.