COVID 19 Disruption – 6 insurance products rendered useless during the lock-down

• May 30, 2020
• LUTAKOME
• 1 comment

There is no doubt the lockdown has caused great damage to many sectors of the economy and ironically boosted some like pharmaceuticals, e-commerce, telecoms, etc.
For the insurance industry however, there are mixed feelings and at the moment some company divisions are totally redundant with the fear of extinction as a result of the COVID 19 lockdown and aftermath. Below are 6 insurance products that have been rendered useless following the COVID 19 lockdown.

1. Travel insurance
This insurance product taken out by those planning to use air transport to safeguard themselves against losses during the journey; such losses range from cost of medical treatment abroad, cost of replacing lost luggage/baggage, cash, documentation, cost of alternative accommodation following a cancelled/delayed flight, and many more.
The global pandemic which has not only led to the grounding of aircrafts but also led to bankruptcy of some airlines automatically means no one is flying out to require travel insurance.
This environment has rendered all those whose full-time role is to work on travel insurance totally redundant.

2. Motor Third-Party
This is a statutory type of insurance cover for all motorists whose purpose is to compensate any pedestrian or passenger who gets injured through a traffic accident whether at fault or not. Given that most of the vehicles on Ugandan roads only have third-party insurance, and during the lock-down they were all grounded due to the government measures to curb the further spread of the virus; the few vehicles that remained on the road during the lock-down under permission had less motivation to renew their third-party insurance due to the lack of enforcement for this cover with most traffic policemen fully focusing on verifying movement permits and stickers.
This meant that very few third-party only stickers got issued during the lock-down.

3. Aviation Insurance
This type of insurance cover is meant for all Airline Operators and is taken out to safeguard them against all sorts of aircraft related risks such as the physical loss of an aircraft following material damage, legal liabilities arising from both passengers onboard and members of the general public should the aircraft lead to loss of lives or property, etc
With our Uganda Airlines touching the skies in August last year, there was an anticipation that the number of Bombardiers would increase leading to the requirement for additional insurance coverage but due to the lock-down all this has to take wait hence no activity in this line of insurance.

4. General Public Liability
This type of insurance is available to all those mostly running business to safeguard them against legal costs should their business operations cause any harm to the general public.
This largely applies to those involved in the business of recreation which gather big gatherings such as sports events, entertainment events, hotels, restaurants, etc and covered risks can range from food poisoning, bodily injury, premises pollution, tour operations risk etc.
This class of insurance was greatly affected by the lock-down due to the low or no business for all those requiring big crowds.

5. Collateral Protection Insurance
This is a collection of a number of insurance products linked to loans issued by lending institutions to protect mutual interests of both the lender and the borrower following occurrence of an event insured against. These can be damage to the loan security through fire, theft, damage, etc.
During the lock-down most lending institutions cut down on lending out new money which automatically meant that there was no collateral to insure which greatly affected this channel of business

6. Credit Life Insurance
This type of insurance cover is meant to take over the loan repayment following the death, disability, or terminal illness of the borrower many times extended to cater for involuntary loss of employment. For many lenders this cover is mandatory for all borrowers and due to the scale down on volume of loans during the lock-down, this type of cover was greatly affected rendering most insurance companies which largely depend on this redundant.

Do you think some classes of insurance will be totally substituted after the lock-down or they will bounce back ?
Which of the above classes of insurance in your opinion are the most affected ?

Share your thoughts