Shifting the goalposts at this delicate time could be devastating for the insurance industry as insurers cannot assume liabilities that had been specifically excluded, Julian J. Mamo, Managing Director at GasanMamo Insurance Ltd, said

“Moving the goalposts at such a delicate time will have a catastrophic effect on the sector and, consequently, the economy, since insurers are simply unable to discard policy wordings and assume any liabilities that have specifically been excluded or not contemplated in the cover provided and, thus, have not formed part of the pricing and capitalisation of these companies,” he told whoswho.mt.

The Malta Financial Services Authority said last month that changes in the terms and conditions of any insurance policies already issued cannot apply retrospectively or mid-term during the policy period.

In the case of policies offering cover for consequential loss, insurance providers have to clarify what would be covered in case of claims arising from the pandemic.

Limits on new policies with regard to claims arising from COVID-19 are allowed but this is not acceptable in the case of existing policies.

Mr Mamo acknowledges that, in these unprecedented times, it is natural that individuals and organisations look for possible avenues to limit the extent of losses brought about by the outbreak of COVID-19.

The depth and spread of the outbreak, he points out, goes well beyond what has been contemplated or thought possible. It is for this reason that individuals and organisations look to governments for financial support and various packages have been put together with a view to keeping the economies going on virtual life support until such time as the pandemic passes and normality is resumed, Mr Mamo continues.

“Keeping the economy on life support, suggests that parties find ways to meet their contractual obligations. Contract certainty is a pillar of the rule of law and one that insurance has operated in for centuries. In doing so, it contributes immeasurably to the economic cycle, indemnifying individuals and organisations that have suffered financial losses that have arisen from perils contemplated in the policy,” he asserts, before making the warning against shifting the goalposts.

Mr Mamo remarks that insurers are mindful of the situation that has evolved and stand with their clients in this difficult time, bearing in mind that they too are impacted by the situation and will, thus, do their utmost to support them within the policy terms in a constructive and timely manner.

GasanMamo Insurance, he continues, considers this to be a critical time for all operators in the economy and, therefore, insurers too are monitoring closely the impact of the outbreak. The company implemented its business continuity plan and is successfully servicing clients with the vast majority of staff working from home, while the head office and branches remain closed. All staff and management have risen to the occasion and the company was working well in spite of the challenges, he notes.

Admitting that is far too early to determine the quantum of claims in view of the very fluid situation, Mr Mamo stresses that, as a company, GasanMamo Insurance is well capitalised and has robust policies and procedures in place to ensure it is well positioned to meet its obligations, even if the situation is certainly challenging certainly.

“We would like to provide reassurance that, as a company, we have always been and will remain available for our clients. We are accustomed to being there at a time of need and, while we appreciate that this is an off the scales situation, we remain committed to providing the excellent service clients have come to expect from us,” Mr Mamo assures.

Matthew von Brockdorff, who has just taken over as Chief Executive Officer of Atlas Insurance PCC Ltd, notes that although small in relation to most foreign ones, local insurance companies are generally well capitalised and have adequate solvency margins. Furthermore, he remarks, they are supported by strong international reinsurers and, as has always been the case, are committed to provide appropriate remedy and response to claims submitted by policyholders within the insurance cover provided.

“No doubt, the pandemic is going to have a significant negative impact on the local insurers with insurance claims losses, reduced premium sales due to an economic slowdown and losses on their investment portfolios due to the market prices drop.

“Like many other industries, local insurers will have to adapt to find the best way to keep serving their customers and keep their businesses moving forward,” Mr von Brockdorff says.