What to do from our latest thoughts and observations?
- Be aware that COVID-19 related claims may restrict payments from insurers.
- Given this unprecedented situation we urge you to check that all their paperwork is in order. Ensure that the scheme Trust Deed is up-to-date, relevant bank accounts are set up to receive payments from any death claims, and that the expected cover is in line with the expected liability.
There are around 11.5 million insured employees in the UK. When comparing this number to the number of confirmed COVID-19 cases within the UK, the percentage of current ‘at risk’ members remains relatively low (less than 0.05%). However, the spread of the virus is unprecedented in recent times and we keep a watchful eye on whether life assurance claims will be impacted.
At this stage it is too early to predict long-term trends. However, we do think there are some key areas to focus right now.
Catastrophe limits
Catastrophe limits apply to most Group Life Assurance and Group Dependent policies. In cases involving COVID-19 these could limit or exclude payment under the insurance policy.
A “Catastrophic Event” is typically technically defined as:
- “one originating event, accident, cause, occurrence or incident or a series of related originating events, accidents, causes, occurrences or incidents, that directly or indirectly results in the deaths of more than 1 (this number will be provider specific) insured member, irrespective of the date of those deaths or the period of time or area over which the originating events, accidents, causes, occurrences and incidents took place.”
So COVID-19 may be considered one such “originating cause” and, therefore, the Catastrophic Event limit may apply if applicable under a scheme.
FCO travel restrictions
Each insurance provider will apply their own terms in this area. If a policy includes an FCO travel restriction, and an employee dies or is incapacitated whilst not adhering to FCO travel guidance, a claim may not be payable. FCO travel restrictions are not typically applied retrospectively.