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The majority of countries all across the world have declared complete lockdown in order to prevent the spread of the disease since social distancing is the only effective preventive measure that stops the deadly virus from spreading.
The major impact of lockdown has appeared in the form of falling global economies and businesses which has eventually affected the employment and job statuses of millions all over the world. The novel coronavirus has had a significant impact on every industry right from finance to manufacturing.
Predictably, the insurance industry is also hard hit by the wrath of the pandemic affecting both insurance providers as well as insurance buyers. If you are stuck amid the lockdown and planning to get yourself an insurance plan or compare car insurance in UAE, this article will help you to understand the impact of coronavirus on the insurance sector.
The coronavirus outbreak has undoubtedly affected willing customers across the boards including the insurance sector. There have been several cases where insurance providers have started to take precautionary measures to protect their businesses from financial losses which has eventually led customers to suffer. However, insurance providers as of now are bound to act in a way that saves customers from monetary losses based on government advisories and guidelines.
A very common fear amongst existing customers is that their plan might not cover deaths due to coronavirus infection. Lack of understanding of the nuances of the insurance plans and policies has led to the spread of this panic amongst the customers. A common factor that has led to a rise in the problem is that people usually tend to purchase insurance plans based on the price.
The plans that are cheaper are the ones that sold extensively. Therefore an important point to be kept into consideration is that people should focus on the features and benefits along with the pricing of insurance plans to ensure that the plan is fruitful for them. Inexpensive plans provide basic coverage only and hence do not provide protection against epidemics and pandemics.
According to research based on statistics from a poll in 2013, a pandemic was considered as the biggest threat to the insurance industry. The novel coronavirus was quite rapid and did not provide room for insurance companies to develop plans and strategies to counter the impact on the industry.
Very often a lot of consumers think that these insurance companies are quite big and stable organizations that are financially capable of countering the impacts of such diseases which is not true completely. There are numerous risks that outbreaks like this pose to the insurance industry that have not been witnessed in the past. One of the major issues faced by large insurance companies and re-insurers is that majority of their events have been canceled due to the outbreak. Globals events like the Olympics and other sports events constitute a major portion of the funding of these organizations.
If the current situation worsens the probability of collapsing life, car and health insurance companies that offer facilities of compare car insurance in the UAE increases exponentially. The most hard-hit section of the insurance market will be life insurance mainly due to a sudden drop in the stocks and a rise in the rates of mortality. Paying out to the insured parties in the form of sum assured will largely impact the section of the business causing finances to fall pointedly.
The current situation compelled the administration to defer the renewal of car insurance in the UAE due to the coronavirus outbreak. Similar to the other sections of the insurance the car insurance market is also largely hit by the wrath of the COVID-19 causing a significant drop in the revenues generated via comparing car insurance in Dubai and purchasing them.
The Central bank of the UAE has approximately doubled the stimulus package in order to support the falling economy amid the phase of financial instability caused due to the spread of the deadly virus. Furthermore, with the complete lockdown in Dubai has caused a fall in the total revenue generation of car insurance in the UAE. The Dubai stock market has also been largely affected due to the coronavirus pandemic causing a drop of almost 36 percent in the first quarter of 2020.
In a Nutshell
The current situation after the outbreak of deadly novel coronavirus has affected the lives of millions that includes businesses as well. If the situation does not improve in a couple of months it is very certain that the insurance industry in the UAE as well as across the globe will witness downfall.