There are two broad types of insurance: life and non-life. With life insurance, the policyholder keeps the plan active by paying premiums to the insurance company. When the policyholder passes away, the insurer pays a lump sum to the designated beneficiary. Clients with non-life insurance – also known as general insurance – can file a compensation or reimbursement claim for costs incurred as a result of loss or damage. Categories of general insurance include motor, liability, and property insurance.
Brokers play an important role in providing clients with independent advice about the types of insurance available, negotiating the best packages and offering the most suitable plans. In March 2020, Aon announced plans to buy Willis Towers Watson, which would make it the world’s leading insurance broker – overtaking the current market leader Marsh & McLennan Companies. If the acquisition receives regulatory approval, the two companies expect the deal to be completed in the first half of 2021.
It is becoming increasingly difficult for customers to obtain their ideal insurance cover at a good price because the industry continues to increase premiums. Insurers may be forced to introduce even higher prices in response to the economic impacts of COVID-19. The pandemic halted global supply chains, caused volatility in the financial markets, and has left many business sectors with uncertain futures, particularly the aviation and tourism industries.
The global insurance industry has a vital role to play in supporting clients through times of crisis, and policyholders have inundated all insurance companies with inquiries and claims. However, COVID-19 has posed particular challenges to life insurers, and there are concerns about whether they will be able to process all coronavirus death claims on top of the claims for all other deaths. Life insurers typically invest the premiums they receive, but investments in assets like bonds and mortgages have been affected by falling interest rates.
Event cancelation policies provide comprehensive protection for clients, but global insurers are left picking up the pieces when major events are canceled. The Tokyo 2020 Olympic Games has been postponed by a year because of the coronavirus, and insurance providers for the event may suffer significant losses as clients look to recoup some of the money. As a consequence of the setback, insurers may have to seek help from the reinsurance sector.
Put simply, reinsurance is a form of insurance for insurers. In cases of high complexity and risk, reinsurance helps to relieve some of the pressure on an insurance provider because their potential loss is now shared. A reinsurance broker acts as an intermediary between multiple insurance companies, helping to find a deal that suits all parties, and agreements typically result in premiums being shared among all involved companies.