COVID 19 – Regulatory insurance measures, decrease of risk

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COVID 19 – Regulatory insurance measures, decrease of risk

Published 10 septiembre 2020

Due to the world crisis generated by the pandemic, all governments around the globe have been taking different measures to mitigate and control its impact in a variety of areas. One of those areas is the insurance industry, which due to its particular nature has been dealing with the crisis on different fronts. In Colombia, the local regulator issued on July 5, 2020 the Circular 021 in which it laid out instructions related to the premiums charged in policies that had affected the insured risk due to the preventive measures put in place, in particular, the lockdown.

It was considered that some risks had decreased, due to such measures, and therefore, the regulator urged insurers to identify which lines of business had shown a lower exposure referring specifically to Auto, Aviation, Hull and Marine transport, third party liability, machinery breakdown and CAR. In light of a decrease of the risk, a reduction of the respective premiums should be applied –on behalf of insureds- which could be materialized by way of reimbursement of premium, coverage extensions, discounts on renewals, etc.

Insurers were advised to contact insureds and to publicly inform about the adopted mechanisms.

The above measures have been taken by some companies to even offer new types of insurance, such as Auto Insurance which premium would be charged based of the miles/km driven, rather than for a specific period of time.

Authors

Juan Diego Arango

Juan Diego Arango

Bogotá D.C

+571 744 3264

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