Protection & Covid-19: How are insurers adapting their underwriting and claims strategy?

The days of lockdown and hopes of a vaccine may be a thing of the past, but the Covid-19 pandemic is by no means over. With cases of new infections continuing to rise as the UK heads into the traditional flu season, the prevelance of the virus is expected to be with us for a while longer, despite the success of the initial vaccination rollout.

COVER asked five key questions of several major protection providers - AIG Life, Aviva, Legal & General, LV=, Royal London, Scottish Widows and Zurich - regarding their approach to vaccination status, those that have previously contracted Covid or are suffering from Long Covid symptoms, and their communications with brokers and clients on the issue.

How are you incorporating vaccination status into new protection applications?

Of the insurers COVER asked, Royal London, Aviva, Zurich, LV= and AIG Life all stated that vaccination status was not queried as part of new policy applications.

"We don't ask new protection insurance applicants about their Covid vaccine status because we don't ask for that information in relation to any other vaccine and we know most people applying for insurance will have had the vaccination," explained head of underwriting strategy at AIG Life, Helen Croft.

Scottish Widows' head of protection underwriting, Claims and Commercial Strategy, Scott Cadger, said that for customers there were not fully vaccinated, a cap would be in place at "the higher end of the terms we can offer" and that "for those that have been fully vaccinated, our risk appetite will be higher."

Meanwhile, Legal & General's underwriting director, David Banks, explained that cover from the insurer was postponed "for the time being" for those that were unvaccinated, which he clarified "is expected to be a very small number of people," until applicants had received all initial vaccinations, excluding any subsequent booster shots.

"Allowances will be made for those who have not had the vaccine due to medical reasons, such as allergies or pregnancy. The decision around what cover will be available will be based on why the individual has been classed as vulnerable - i.e. the underlying health conditions. Not having had the vaccine does not in itself rule someone out of cover," he said.

How is disclosure of previous Covid-19 infection and/or treatment factored into your underwriting decisions?

The majority of insurers questioned stated that applications will query whether applicants have either contracted Covid-19 or experienced symptoms - such as an unexplained continuous cough, fever, high temperature, loss of smell or taste - within the previous 30 days.

"Beyond that timeframe, they only have to disclose coronavirus if they have to answer one of our standard application form questions due to other symptoms, medical conditions or investigations, commented Royal London's chief underwriter, Craig Paterson. "An example could be the respiratory question which asks in the last five years if they have had ‘Asthma, bronchitis, or any other disorder affecting your lungs or breathing?'"

Aviva recently announced that it had reduced the requirement for applicants to disclose a Covid diagnosis or symptoms from 30 days to within the previous 14 days, stating that the change will allow applications to receive an immediate underwriting decision.

AIG Life's Croft detailed that the insurer is planning to make a similar change to its underwriting postponement period, recognising that Covid "risks have again evolved," referencing the re-opening of schools and removal of social distancing, resulting in higher case numbers.

"We currently ask customers if they have in the last 3 months, had a positive antigen (diagnostic) test for Coronavirus (COVID-19), had a fever or high temperature, a new continuous cough, breathing difficulties or any other symptoms of Coronavirus (COVID-19) or been advised to self-isolate for any other reason," explained Zurich's chief underwriting office, Nicky Bray.

Bray detailed that if an applicant has tested positive an initial postponement period applies, and that once a full recovery has been made, Zurich can offer standard rates across life and critical illness one month after returning to their normal activities, and standard rates on income protection after three months.

How are you factoring in those suffering with Long Covid when it comes to both applications and claims?

Most of the insurers COVER spoke to stated that they did not ask specific questions relating to symptoms of Long Covid within policy applications or that these were within the scope of its existing application questions. However, some are recording an impact among claims they are receiving.

"We're seeing more cases of customers claiming because of Long Covid in the last six months, when comparing the second half of 2020 with early 2021," commented Scottish Widows' Cadger. "For customers that have made a claim and been unable to return to work, this has tended to be because of an underlying health condition."

Rachael Bradbourn, head of claims strategy at AIG Life, said that the insurer has seen a "small number" contacting the insurer relating to Long Covid symptoms, while Zurich's Bray said that it was "quite possible" that Long Covid could generate a valid claim under an income protection (IP) policy.  

"It would depend on the nature and severity of the symptoms and if they prevent someone working, but if they do, the claim should be a valid one," she said.

Neither Covid-19 or Long Covid are included among the defined terms of a critical illness (CI) policy, however complications that arise from the virus, such as respiratory, heart or kidney failure, could meet the terms of specific CI policies, said Aviva's chief underwriting office for health and protection, Robert Morrison.              

It is in the support services space that insurers have made more concrete moves to provide support to policyholders that are experiencing symptoms of Long Covid. Banks highlighted that L&G launched a dedicated Long Covid Support package for those making an IP claim as a result of being impacted by this condition, while Morrison said that Aviva had set up a specific Covid rehabilitation service to support customers with their recovery.

"Symptoms and long-term effects vary so the additional support we've provided has been bespoke, for example respiratory physiotherapy, cognitive behavioural therapy (CBT) and graded exercise programmes," said Bradbourn.

What questions are you fielding from advisers and clients on the continuing presence of Covid when discussing your proposition?

Although protection insurance providers have removed almost all the underwriting restrictions put in place last year during the worst of pandemic, the majority of communications with advisers and clients are focused on those that are still in force, according to the insurers questioned.

Royal London's Paterson detailed that although the insurer's underwriting had "broadly returned to normal," it was fielding questions from a "very small number" of customers where restrictions remain, primarily from older clients and those with significant pre-existing health conditions.

"For these individuals, the maximum loading we can apply - in terms of tolerance to risk - before we are unable to offer terms has temporarily been reduced using a tiered approach by age," Paterson said.

"A typical question would be when we can remove the last of the Coronavirus restrictions and return to a business as normal approach. We are continually monitoring the rollout of the vaccine, its effect on new variants, and the level of infection and mortality in the UK with the aim of fully returning to normal as soon as we can."

In addition to questions relating to underwriting restrictions and exclusions, LV='s protection proposition and marketing director, Justin Harper, said that there were other areas of questioning from advisers and clients, including handling fake information regarding vaccinations and its impact on access to protection, and what the insurer is doing to encourage quicker responses for GP reports or evidence.

Both LV= and AIG Life detailed that they have also been fielding questions focusing on the financial ramifications of Covid, such as those that were placed on furlough, made redundant or lost their jobs, and what support services are available as part of individual policies.

How are you staying abreast of the latest developments and data concerning Covid when making decisions on your propositions?

The insurers COVER questioned cited a variety of sources of information and data pertaining to Covid developments, including: internal data, government guidance and publications, contact with reinsurer partners, medical papers, data from SAGE and the Office of National Statistics, research published in medical journals such as The Lancet and The British Medical Journal, actuarial data, and engagement with medical officers and clinical experts.

LV='s Harper said that the provider was "continuously learning" from its experience throughout the pandemic and used this approach to inform its strategy: "We are rethinking the ways we offer protection and have introduced measures to make the application process easier. As we monitor the impacts of Covid-19 and its variants, we must keep challenging everything we do," he said.