According to PRIAO of IRC, the liability insurance beside P&C insurance is one of the key business lines in the insurance industry that normally compensates for the property losses and physical indemnities triggered due to the unintentional action or inaction.

A research report entitled “The Impact of Coronavirus Outbreak on Liability Insurances” recently released at IRC, delivers a brief report on the liability insurance performance in a ten years period and provides a thorough analysis of the coronavirus impact on such performance in the insurance industry and recommends some helpful strategies.  

According to the results reported the written premiums in some liability lines in places such as retiring rooms, recreational complexes, training and sports centers, kindergartens, and etc. due to the coronavirus closures have decreased up to 90%.  Furthermore, the direct correlation between the liability insurance with the Islamic Penal Code, annual sliding scale based premium based on blood money rate, has dramatically decreased the liability insurance portfolio. Coronavirus outbreak has caused not only a considerable decline in the insurance industry portfolio but it has decreased the mandatory and optional reinsurance share of CII and has further exposed the insurance sale network with lower income and liquidity due to decrease in liability policy underwritten.

Based on the results of this report, securing the business owners, providing social and economic support for the exposed people, supporting the producers, restoring major projects and creating stable employment are some of the significant features of the liability insurance in compensating for the third party incurred losses. Thus, the liability insurance providers can consider strategies such as suspending the policy duration, postponing installments, and allowing on premium discount for the coronavirus stricken policyholders.

The research report also sums up some of the most common challenges and legal ambiguities surrounding the employers’ liability insurance during the coronavirus outbreak that follows:

1. Given that the state is the principal health authority of the society, it is required to pay from the public funds for the healthcare and preventive costs of the diseases such as COVID-19 for the public especially the workers. However, if the state pays the costs to the employer and the employer refuses to pay the infected workers or does not provide them with the necessary relevant kits, according to the law, the violating employer is legally responsible for any losses incurred including death of the workers due to the disease.

2. If the disease occurs in the workplace and the employer provides enough evidence that s/he has complied with all the health and hygienic directives and that it was the worker’s misconduct, s/he may not pay for the compensation charges.

3. Employers’ civil liability insurance will cover the losses due to the losses incurred for the employees such as poor eyesight that has been gradually developed due to the jobs assigned for the employees after the court ruling. Nevertheless, since the coronavirus disease does not occur gradually or due to the work conditions and it is extremely difficult to identify the exact reason and place of the infection, the loss compensation payment even with the court ruling seems impossible.

The Persian full text of the research report is available at this link.