The revolutionary idea that defines the boundary between modern times and the past is our ability to understand and manage risk -it converted the unknown future from an enemy into an opportunity (Bernstein Against the Gods – The Remarkable Story of Risk).

In approaching risk management, the basic tension is to what extent will the past determine the future? The COVID-19 pandemic- a Black Swan event – has significantly impacted the insurance market, the approach to risk management and claim trends.

The following is a discussion of five claim trends that emerged from the catastrophic Covid-19 pandemic, trends which may well bring about systemic change to the insurance market as we know it.


2020 forced us to revert to unconventional working arrangements although we might not have realised it at the time. A new norm of working emerged amidst the pyjama days; virtual meeting riddled with “hello can you hear me” to your face being stuck in a strange position on the other person’s screen while you are proceeding to act professionally. An increase in claim trends has been seen in the Employment Practice Liability(EPL) market. Unique new workplace disputes have arisen resulting from remote working, adjusted office setups, an increase in retrenchments and a decrease in remuneration. A few examples of COVID-19EPL claims include alleged unfair dismissals due to failure to follow procedural requirements, alleged failure to pay outstanding amounts owing to employees and allegations of discrimination when retrenching employees. Even if you are managing your organisation successfully, the EPL risks unfortunately remain prominent. An EPL policy offers protection and risk management for claims resulting from alleged unfair dismissal, discrimination, or the failure to pay outstanding remuneration (to name a few).


Social distancing has caused a rapid growth in digitisation and businesses find themselves significantly more exposed to cyber risks than ever before. Examples of claim trends in cyber risk are increased reports in ransomware as well as damaging attacks on the e-mail messenger applications utilised by businesses. The change in working arrangements perhaps means fewer employees at the office and therefore fewer property assets to cover, but results in an increased cyber risk exposure. On a more positive note, technology has enabled continued claims handling without disruption while working remotely and resulted in quicker response times to claims submitted.


It can be argued that the pandemic has given us a renewed sense of awareness. An awareness, in particular, of what we are covered or not covered for. Many policyholders may have found themselves not holding cover for risks(or rather for the unique risks) that were brought about by the COVID-19pandemic. In the same breath insurers risk appetites have adapted as well. This is due to the risk in some areas increasing and decreasing in other areas. For example, working remotely has decreased our travel time on public roads and in doing so reduced the risk exposure inherent in traveling. Furthermore, an increase in cyber-crime risks has arisen from an increased reliance on technology. Perhaps the increase in risk awareness resulted in an increased awareness of the needs of consumers which may in turn lead to the creation/purchasing of insurance products that are more suitable.


In basic terms social inflation can be described as an increase in litigation, higher awards in Court as well as new delictual concepts. As a result of a deteriorating consumer confidence in large corporates people have been left with “[a] feeling that someone needs to pay when there’s some kind of damage or injury sustained, regardless of negligence.” Social inflation is notorious for hitting certain insurance lines more than others such as commercial auto, Medical Malpractice [as well as] in certain Professional lines like Directors’& Officers’, and in the umbrella and excess liability markets. With the closing of the Courts during lockdown and the slow pace of litigation post hard lockdown due to social distancing measures, a smaller workforce was employed to deal with a large backlog of matters. Plaintiffs may start to realise that it may take years before judgment is obtained in a court of law. Perhaps social inflation will then slow down, and parties might be more willing to settle outside court or mediate the dispute.


Pre COVID-19 pandemic the insurance market had already hardened which has now been exasperated by the pandemic. A hard market means higher rates and less competition. An increase in risk mitigation by the insured is on the rise and it is thus essential to build strong relationships with customers, clients, and other role players in the insurance industry as all parties must work together collectively to find the best solutions during these trying times.

‍The Black Swan event has significantly impacted our lives in many ways. However, whether the change in claim trends will be good or bad for business will be determined by how we respond to them. Risk management requires resilience and creativity to make it through challenging times. Every challenge opportunity. By paying attention to the changes brought about by theCOVID-19 pandemic to risk, we can adapt to better support customers and build a better future for the insurance industry. Because what is insurable in the market changes overtime.



Peter L Bernstein Against the Gods – The Remarkable Story of Risk (1998)

Moorcraft B What is social inflation, and why is it hurting insurance? 3 January 2020

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