Australian insurers are facing extreme demand as thousands of travellers, business owners and residents continue to lodge claims amid the coronavirus crisis.
Last year, the nation’s insurers paid out more than $600 million in travel-related claims while averaging $151 million per working day in general claims.
Those numbers are expected to soar as more people fall ill or die from COVID-19, or find their workplaces shuttered for an extended period of time.
Insurance Council of Australia head of communications and media relations Campbell Fuller said the sector is adapting to the hour-by-hour changes in what is becoming an “unprecedented” crisis.
“This is a crisis on top of one of the worst national disasters on record, so the focus right now is naturally on working out how [insurers can] help their customers,” Mr Fuller said.
So how do Australians’ policies stack up during the lockdown?
Most travel insurance policies now under a cloud
As reported previously by The New Daily, tourists were encouraged to consult their policy’s product disclosure statement for pandemic exemptions once the virus became a “known event”.
Those who had already taken out a policy could be covered for medical and cancellation-related expenses, while those who took one out after the virus became public knowledge would find difficulty.
The federal government’s historic overseas travel ban has since complicated matters.
The ICA notes insurers are working with Australians stranded overseas on a case-by-case basis, and some are collaborating with DFAT to orchestrate evacuation flights.
Mr Fuller said some had temporarily stopped selling policies to new customers, given the uncertainty around when international travel bans will be lifted.
“[Scott Morrison’s decree] may make it easier for some consumers to make a claim – but in most cases, the long-standing exclusions around known events and pandemics would apply,” Mr Fuller said.
According to the Australian Financial Complaints Authority (AFCA), disgruntled policyholders have already begun making formal complaints after being rejected by their insurers.
“AFCA has received a small number of complaints that relate to COVID-19. The majority of complaints have been about the denial of travel insurance claims,” an AFCA spokesperson told The New Daily.
Life and health insurance policies largely unaffected
The Financial Services Council said those with policies as of March 11 (the day the ICA announced an ‘insurance catastrophe’) would not be subject to exclusions.
But customers who recently signed up or updated their insurance plan should talk to their insurance company if any new exclusions apply.
Life insurance provider MLC told policyholders there are “no specific exclusions for COVID-19 in our insurance policies” that would affect its ability to assess claims, while TAL said existing clients would also be covered in the event of a coronavirus-related death.
Canstar group executive Steve Mickenbecker said because many of COVID-19’s symptoms are similar to the flu, which is covered in most insurance policies, hospital treatments should be claimable.
“With health insurance, they cover you for certain treatments in hospital – if you have to go to a private hospital to be treated for coronavirus, provided they have a bed and ventilator for you,” Mr Mickenbecker said.
“There can be some exceptions. Some of the real cheap policies don’t cover much at all, so you have to be careful if you have a low-tier policy.”
Income protection for some, not for others
When it comes to workers, their outcomes depend on their individual circumstances, according to many insurers.
State government workplace authorities say workers are only entitled to a coronavirus-related claim if they contracted the disease while working.
NobleOak, on the other hand, told its policyholders they could have a successful income-protection case if they received a coronavirus diagnosis, or any other illness or injury.
But if a workplace shuts due to a government-enforced lockdown, workers have no grounds for a claim.
In these instances, they can instead turn to the government’s expanded safety net.
Businesses may not be covered by interruption policies
According to the ICA’s website, many SMEs may find themselves without much recourse in this pandemic, as most interruption policies only cover physical damage.
Although some infectious diseases such as Legionnaires are covered, the global insurance sector began excluding pandemic scenarios in the mid-2000s.
“Whilst some specific policies may differ, in Australia the majority of business policies are likely to contain exclusions relating to losses caused by any disease notifiable under … the Quarantine Act,” ICA said.
Mr Mickenbecker said Australian business owners would be hard pressed to find an insurance policy that includes global pandemics in product disclosure statements.
“There are general insurance policies that cover for your premises or important equipment are damaged in an event like a fire, or business life insurance policies where a key person has a terminal illness or dies – but not for an event like this,” Mr Mickenbecker said.
But a number of business support measures were included in the government’s latest stimulus package.