The COVID -19 pandemic has taken the world by storm and disrupted government and business operations and functions. It has caused a major dip in supply chains, paralyzed critical services including travel and led to a complete shutdown of learning institutions.
Economies and global markets have entered into a period of extreme volatility, and 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 amongst the sectors reeling from virus-induced shocks. Businesses will continue to feel the pinch as a direct result of the COVID-19 pandemic. As a matter of policy, the majority of insurers and reinsurers do not cover pandemic risks but 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 lead the overall bottom lines to shrink for the year 2020. 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 is that the downward trend will continue long after it is contained.
The last known pandemic to have affected the world to this magnitude occurred in 1918. However, in this modern-day more and more measures are being put into place to ensure the safety of more people in a bid to reduce the number of infections and the spread of the disease.
As a corporation, 50% of our workforce is working from home at any one time and we have incorporated a shift mechanism that allows those within the office to maintain social distance.
The organization has fully complied with government directives and implemented protection measures from sanitizers across our buildings to informative blasts that keep employees well informed on matters of safety.
According to an inaugural COVID-19 CFO Pulse Survey, finance leaders in the United States and Mexico outlined the top 3 concerns in regards to COVID-19 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.
Insurance & 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 its markets.