Industry Updates
Chain Reaction
Allianz chief claims officer: Businesses look to repatriate supply chains.
Thomas Sepp
Following disruption during the pandemic, businesses are looking to repatriate supply chains, said Thomas Sepp, chief claims officer, Allianz Global Corporate & Specialty.
The coronavirus outbreak has posed a unique challenge and test for commercial insurance claims. Historical patterns have been upended, while claims teams have had to maintain service levels during a period of significant operational challenges.
Sepp recently spoke with AMBest TV. Following is an edited transcript of the interview.
What changes in claims patterns for companies have you noticed during the lockdown periods?
What we have seen is on the entertainment side. That will be no surprise to a lot of people that are familiar with us in the insurance industry. We have seen a couple thousand claims in the entertainment sector—movies, TV productions— and in live event cancellation. That was a lot.
That was offset in some other lines. For example, property, marine and casualty. Less inland transport, less slip and fall, in line with this economic activity. For the rest of the lines, it's pretty consistent.
How have business interruptions claims developed?
Where we have seen a number of claims ... was our medical business in the United States. Yes, there were claims notifications in larger numbers, and we have settled already a number of those claims where coverage was actually existing.
The reality is that in most of our policies, physical damage is required. Actually, there is no coverage for those business interruption claims that are based on the COVID-19 situation. That's where the team's doing a lot of work, also working with the clients, working with the brokers and explaining that particular situation.
[This leads] a little bit to a question overall about insurability of the whole COVID and pandemic situation. That's an issue we're working through.
We also have business-interruption claims that are not caused by COVID. There we saw something pretty interesting, as far as I am concerned. ... The question is what's the underlying economic damage. We had one situation, for example, where a car part manufacturer had issues and had a business interruption claim. That turned out to be actually cheaper and less valuable, compared to the normal situation, because then the car manufacturers partially have been shutting down their factories during the COVID times. The whole situation didn't turn out as severely as the client and we thought in the very beginning.
What do you think the long-term impact on corporate risk will be?
Maybe we look at two different trends. One thing we have seen coming through strongly is the whole digitalization push. We were all surprised how quickly the tide was turning. People taking up home office situations, remote inspections, remote servicing. There's a lot of things going on on a digital cyberspace basis. We think that's going to have a profound implication on some of the insurance situations. Namely, the cyber, but also some of the employers' liability related stuff, for example.
The other thing that we're observing and it's being discussed is repatriation of supply chains, because we saw the disruption was severe and had caused issues. Companies and clients of ours are also looking into scenarios to repatriate.
That will be interesting to see, because we think it's going to be better in terms of claims happening. It should be a better-controlled environment, but also, there are going to be cost effects to it. If you're on your shore, or bring it back home, the costs of those production services, etc., will also go up.
