The insurance sector lives from the economy and society and its primary function is to guarantee them. It is said that the first insurances arose out of the need for solidarity with the families of departing sailors in the early days of navigation over the great oceans, and that they were funds to which all the families of sailors contributed in order to deal with the misfortune of some losing the elements that most contributed to their livelihood. This logic of mutuality and public interest is an integral part of the ethics of this business, obviously without detracting from the fact that private insurers aim, at the end of the day, to remunerate their shareholders.
In this Covid scourge, there were several initiatives by insurers to change business rules and side with the misfortune of their Customers and we wanted to leave here a short summary of the measures and their effects, in a tribute to the solidarity of the sector.
Exceptional and temporary regime for insurance contracts in connection with the pandemic disease COVID-19
Through the Decree-Law No. 20-F/2020 of 12 May, whose effects were extended until 31 March 2021 by Decree-Law no. 78-A/2020 of 29 September, the government approved a an exceptional regime for the payment of premiums and an exceptional regime for insurance related to activities that have been subject to a significant reduction or have been suspended resulting in a temporary reduction of risk. It provides, among other things, that insurers and policyholders may agree among themselves to pay the premium at a date later than the beginning of the risk coverage, to waive automatic termination or non-extension in the event of non-payment of the premium, to split the premium, to extend the validity of the insurance contract or to temporarily suspend premium payment. In the case of compulsory insurance, and only in such cases, in the absence of agreement between the insurer and the policyholder, and in the event of non-payment of the premium or fraction thereof on the due date, the contract is extended for a limited period of 60 days from the due date of the premium or fraction thereof.
What has this Diploma already allowed until 31 October?
According to data published by the ASF - Insurance and Pension Funds Supervisory Authority (ASF_3 Dec_ Result of the application of the measures set out in Decree-Law 20-F/2020, of 12 May, impacting on consumers):
- About 3.9 million contracts have been agreed between the parties with a view to applying a more favourable regime for the policyholder with regard to the payment of premiums, most of which were in the field of Motor insurance (1.7 million);
- At approximately 4.5 million policies (most Motor insurance, 2.7 million, and Fire and Other Damage, 1.4 million) the validity of compulsory cover has been extended by 60 days;
- Premiums were reduced by around 690,000 contracts covering activities that had been suspended or substantially reduced, or whose establishments were closed due to the exceptional and temporary measures adopted in response to the COVID-19 pandemic.
- A little over 3,500 policies corresponding to the above-mentioned activities were also subject to a fractioning of the premium at no additional cost for the policyholder.
It should be noted that already before the entry into force of this DL 20F, right after the State of Emergency was decreed on March 18th, several Insurers freely took several initiatives of solidarity with their clients, namely the creation of a renewal bonus for Motor insurance, in case of absence of claims, or the return of previously charged premiums.
A number of other actions have been carried out, by free initiative, such as:
- The APS - Portuguese Insurers Association, created a SOLIDARITY FUND of EUR 1.5 MILLIONSupport for the FAMILIES OF HEALTH PROFESSIONALS AND RELATED STAFF who, during the period of the state of emergency and in the course of their work, have tested positive for Covid19 and have died as a result.
- The Ageas Foundation made donations on the GoParity platform, in the STOP COVID-19 campaign, to purchase and donate personal protective equipment to health centres and hospitals
- Fidelidade, in turn, through the FOSUN Group, delivered equipment to combat COVID-19 for Health professionals
- At global level, the MAPFRE group, through Fundación MAPFRE, has allocated EUR 35 million to support various projects to fight the pandemic
- Although coverage of Covid expenses is excluded in policy wording, health insurers in Portugal have en bloc offered the cost of Covid tests against declared symptoms. Several have also set up telemedicine lines to support Covid. And more recently, others have exceptionally waived the exclusion of Covid-related expenses19 for hospitalisations longer than 180 days.
The combination of these measures, associated with an increase of fraud and theft, has meant that, in the Non-Life business lines, the average claims rate - which fell sharply at the time of the state of emergency with the paralysing of activities and motor traffic and with the postponement of consultations and hospitalisations - is getting closer in accumulated terms to that seen in 2019: if we consider the first ten months of 2020, there is only a 2.4 p.p. compared to the same period of the previous year, considering the insurers under the tutelage of the ASF.
