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The Impact of Covid-19 on the Global Economy and Insurance

Tuhina Chattopadhyay
3 minutes, 35 seconds read

The pandemic COVID-19 or the well known “Coronavirus” is gradually stretching its limbs throughout the world. Covid-19 has now spread to more than 168 countries with its epicentre in China. Coronavirus confirmed cases reported globally, adds up to 3,82,108 (24th March 2020) and is still on the rise. With the death toll of 16,587(24th March 2020) the insurance companies have to take it on the chin. 

Public gatherings have been banned in several places. For instance, Mipim — the world’s largest property fair is postponed to the later part of the year. Similarly, the Mobile World Conference in Barcelona is cancelled altogether. From the IPL to the world’s premier basketball league to a 250-year-old parade and sprawling festivals, all national and international events are either cancelled or kept at hold indefinitely. Almost every business (likewise insurance) is impacted with corona outbreak and any business cannot rebound in a day.

Referring to the 2008 financial crisis when credit markets seized up, Mr Muri- Wood said, “The only thing we’ve ever had which was bigger than this was the banking crisis.” 

Businesses, Corona and Insurance

Many businesses have insurance policies that are meant to kick in when disaster strikes. But few of those policies are likely to cover pandemic outbreaks. Business interruption insurance, the coverage typically availed by the companies, as part of their property policies, pays cash to make up for lost revenue when a business has to halt operations unexpectedly.

Despite the fact that most policies won’t pay out if people cancel their travel due to coronavirus; in February, Post Office Insurance saw a year on year rise in sales of policies of 168% and CoverForYou saw a 150% increase.

Queries on new policies have sharply spiked up to 60% since fresh cases of Covid19 reports.

“Globally, we have seen such cases that impact large populations there is an increased push from consumers to get themselves covered. We have seen the same happen here as well in the wave of fresh cases being detected” 

Pankaj Verma, head marketing & underwriting operations, SBI General Insurance.

After the epidemics of SARS in 2003, Ebola in 2014 and Zika in 2015 — insurance companies realized that business-interruption claims could become unwise if they covered closures related to outbreaks of disease. Since then, insurers have taken steps to exclude epidemics from their policy.

Though epidemics are excluded from many business insurance policies, as recession threatens the global economy along with rising insolvencies, all sorts of companies, from airlines to retailers are coming under strain.

The insurers refused to comment, but Atradius said it is expected that corporate insolvencies will grow 2.4% globally in 2020, majorly resulting from the coronavirus outbreak.

The harsh reality

Perhaps, it’s too late to buy coverage for the current outbreak. Insurance companies do agree to take the brunt of the situation and pay the decontamination cost after the outbreak, but would tightly limit the amounts.

With unprecedented turmoil the industry created by the outbreak caused global airlines to cancel thousands of flights. Companies could choose a policy that would cover the deaths from an epidemic, when it passed a pre-estimated threshold, or when a government body — anywhere in the world — ordered a lockdown or travel ban. The policies are intended as custom contracts, so the company would choose according to their own risks.

Coface chief executive Xavier Durand mentioned that hotels and airlines will have to take the maximum brunt of the epidemic outbreak, while Euler Hermes saw coronavirus costing $320 billion of trade losses every quarter this year.

This indicates that companies will have to bear the losses themselves. It can be either directly or in the form of self-insurance funds (large companies often set aside some funds for emergencies).

LV, the insurance giant in the UK, have stopped selling travel insurance with immediate effect as a result of the coronavirus outbreak.

“We can’t insure a burning building,” Mr Ryan Christian Ryan of the risk advisory firm Marsh says.

The bottom line

The Coronavirus have adversely impacted the economy worldwide. From time to time, violent demonstrations slowed down the flood of travellers to a trickle and transactions grind to a halt. 

McKinsey anticipates recession until the end of Q2 because of large-scale quarantines, travel restrictions, and social-distancing leading to a sharp fall in consumer and business spending. However, because of banks’ strong capitalization and macroprudential supervision, a full-scale banking crisis is averted.

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We at Mantra Labs believe that design, just as equally as technology, plays an important role in creating an impact for a brand. A lot of work goes into creating a brand and conveying its story. We believe in creating cutting-edge UI/UX that allows our clients to offer intuitive experiences for their customers and creating new value for them.

Our designers take a holistic view of the user’s challenge for every customer-centric project. Along with understanding the company, it’s marketing strategy and communication, a lot of research about the brand and its users goes into the actual design process. We focus on creating practical designs to bring about functional aesthetics for every challenge we solve. 

Design Challenge of the Day

And that’s what we look for in designers. On 29th February 2020 Mantra Labs organized a Designathon event at its Bangalore office looking for young, creative talent. The weekend kick-started on a high note with a great turnout of designers for the ‘Design Challenge of the Day’. The designers were presented with two problems, of which they had to choose one –

  1. Design an intuitive Mobile application for a chain of hospitals used by patients for booking appointments, buy health packages and check reports for themselves or their family.
  2. Design an intuitive Mobile application for airport passengers which can help them by guiding, interacting and engaging them.

Each designer involved was asked to come up with complete wireframes for the process and two screens with visual design, with 3 hours to solve and then present their work. Each person dived straight into the problem and came up with unique and interesting solutions for the given task. While some brainstormed, others took to sketching out their thought process. 

The Stunning UI/UX Designs

Although the design challenge was tough, everyone did an amazing job. However, there was one person who stood apart from the rest. Mr. Alan Aloysius picked the first assignment – mobile application design for a chain of hospitals. While everyone was brainstorming amongst themselves, he sketched out his ideas on the paper. He focused on making the screens for the app and dedicated most of the time for it. Even though the wireframes were not complete, his presentation showed his clear line of thought on flow and visual design. And hence, he was declared the winner and was awarded a certificate and a cash prize of Rs.5000/-. 

Mr. Aravind Raj, who was declared the runner up also picked the first assignment. His strategy was to focus on the wireframes which left him little time for the visual designs. Despite this, he demonstrated a lot of potential through his work. His presentation showcased his confidence, positive attitude and his clear thought process on the design flow. Considering the above points, Mr. Aravind Raj has adjudicated the runner-up and was presented with a certificate.

Post the UI/UX Design Challenge event, all the participants relaxed, networked and helped themselves with some delicious refreshments.

At the event, we saw a lot of creative potential in people. We at Mantra Labs believe in nurturing talent by giving them real opportunities. We believe that good mentoring, dynamic work culture and the right platform helps in the professional and personal growth of an individual. 

If you are looking for a cohesive and vibrant work culture to join, drop in your portfolio at hello@mantralabsglobal.com and we’ll get back to you.

Also, check out the recent events at Mantra 

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