When company managers rushed to get their staff set up to work from home in March, insurance was unlikely to have been a top concern.
But as the coronavirus crisis has continued, insurers have been changing the way they cover business customers, at least for the short term. Many in the industry believe the pandemic could also be a catalyst for bigger and more permanent changes in the commercial insurance market that could lead to disrupters grabbing greater market share.
“There could be more pressure from insurance companies . . . to understand the environment in which employees are working,” says Nicolas Aubert, head of Great Britain at insurance broker Willis Towers Watson.
Personal home and contents insurance is generally not designed to cover home working. In the short term, some insurers have simply temporarily extended their existing workplace policies so that staff working from home have the same coverage as they would have had in the office.
Patrick Tiernan, managing director of Aviva’s commercial business, says: “We’ve extended the home as the place of business in all reasonable circumstances.” Business customers have not had to contact the company to request policy changes if their staff were working at home. “We just put out guidance that said we’ll cover you,” adds Mr Tiernan.
Aviva has also altered its property policies to give more cover to unoccupied commercial buildings. Usually, properties can only be empty for 30 days, but Aviva has changed that so they have been covered for a total of 120 days during the lockdown.
But as staff start to return to offices and other places of work, or prepare for a more fundamental shift in the way they work, attention is turning to the long-term consequences of the crisis.
According to June research from Piplsay, a market research company, 70 per cent of people in the UK would like to work from home permanently. Should the reality come anywhere close to that figure, companies will have to think carefully about their employers’ liability insurance.
“Employers’ responsibilities don’t change. They need to think about how they safeguard employees,” says Charlie Netherton, head of UK client advisory services at insurance broker Marsh.
That means employers will still need to think about whether work stations are set up correctly and whether electronic devices have been tested — and also keep an eye on employees’ health more broadly. Poor work stations, for example, could lead to claims from employees if they start to suffer from health problems such as bad backs.
“There is a lot to think about from a risk management perspective,” adds Mr Netherton. “Big companies usually have infrastructure in place but small companies are much more variable.”
Cyber insurance is another area that might have to change as companies and their insurers consider the risks of handling lots of data in remote locations. According to Beazley, the insurer, ransomware attacks increased by 25 per cent in the first quarter of the year as cyber criminals took advantage of Covid-19 related uncertainty.
Sarah Stephens, head of the international cyber insurance business at Marsh, says insurers are doing more due diligence on their clients’ homeworking protocols and resilience.
She adds: “We have seen continued growth in new cyber insurance purchases during this time, with some clients citing a new appreciation of how substantial their reliance on technology really is.”
There are concerns, though, that the insurance industry will not react quickly enough to what business customers need. That is partly because insurers are dealing with huge payouts related to the coronavirus crisis and prices are rising — known in the industry as a “hard market”.
Mr Aubert at Willis Towers Watson says insurers may not be very flexible at the moment. “Clients need more capacity and innovation in solutions at a time when the market is hardening and the market is reducing its capacity . . . [that] is not going to motivate insurance companies to rapidly innovate.”
This could create an opening for so-called insurtech companies to make inroads into the commercial insurance market. Over the past few years, a wave of new insurance companies have been launched with plans to use data, artificial intelligence and online distribution to grab market share from slower-moving traditional incumbents.
A sudden jump in the number of people working at home could be just the opportunity they are looking for.
One of them is Dinghy, which specialises in flexible insurance for freelancers in a variety of industries but is also considering a move into the small business market.
“Making insurance more tailored to the risks is key,” says Dinghy co-founder Rob Hartley. “Fixed, annual blocks [of insurance] don’t fit with reality. We are looking at ways to bring insurance much closer to the customer . . . insurance will have to be more flexible.”