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The Covid-19 pandemic has taken the world by storm, disrupted government and business operations and functions across the globe.
It has caused a major dip in supply chains, paralysed critical services including travel as well as seen complete shutdown of learning institutions.
Economies and global markets have entered into a period of extreme volatility.Productivity across all sectors has fallen significantly, except for medical products such as ventilators, test kits and face masks.
In Kenya, the insurance industry is among sectors reeling from virus-induced shocks.Businesses will continue to feel the pinch as a direct result of the pandemic.
Even as the majority of insurers and reinsurers do not cover pandemic risks, as a matter of policy, they should expect to see an upsurge in claims that are indirectly related to the pandemic.
A reduction in gross written premiums is expected to be experienced across the industry. This will see overall bottom lines of insurers shrink this year.Employees working from home are bound to affect the overall productivity of businesses.
How long the pandemic will last and the full range of its impact is difficult to predict. What is certain, however, is that the downward trend will continue long after it is contained.
The last known pandemic to have affected the world in this magnitude occurred in 1918.However, in this modern age, more measures are being put in place to ensure safety of more people to reduce the number of infections and spread of the disease.As a corporation, 50 per cent of our workforce are working from home, and we have incorporated a shift mechanism that allows those within the offices to maintain social distance.
The organisation has fully complied with government directives and implemented protection measures – ranging from sanitisers to informative messages that keep employees well informed on matters safety.
According to an inaugural Covid-19 CFO Pulse Survey, finance leaders in the US and Mexico outlined the top three concerns in regards to the pandemic as financial impacts and effects on results of operations liquidity and capital resources.They expressed concern over a global recession and the effects reduced productivity will bring to different sectors.
These will test the strength of business continuity plans that most companies already have that however may not fully address the fast-moving and unknown variables of an outbreak like Covid-19.Typical contingency plans promote operational effectiveness following events like natural disasters, cyber incidents and power outages, among other crises.
They don’t generally take into account the widespread quarantines, extended school closures and added travel restrictions that may occur in the case of a health emergency.
The insurance and reinsurance companies play a pivotal role during times of economic stress by helping companies and households manage risks and cushion against losses.Yet, as one of the biggest groups of investors, insurers and reinsurers are vulnerable to volatility in financial markets.In a time of global uncertainty, it’s easy to lose sight of the big picture. Kenya Re commits to playing a role in finding solutions to this pandemic in the markets it is in.
-The writer is Kenya Re Managing Director