Swiss Re’s Ojeisekhoba: Pandemic risks require standardised wordings to remove ambiguity

Standardised wordings are required for pandemic risks to reduce the potential for the type of disputes which have dented the insurance industry’s reputation in its response to Covid-19, according to Swiss Re’s reinsurance CEO Moses Ojeisekhoba. 

Speaking during The ReInsurer’s first virtual panel discussion, Ojeisekhoba said the industry had already successfully shown it was possible to take a standardised view with nuclear and war risks.

“My view is that for certain exposures there should be no ambiguity and we should have standardised terms across the industry,” he said.

Ojeisekhoba said this would prevent a situation where the ambiguity of 2,000 different wordings is tested through courts of law, and often subject to differing views.

Vicky Carter, chairman of Global Capital Solutions, International, at Guy Carpenter, also recognised the need “to remove ambiguity and have absolute clarity of language”.

“Rather than have contracts that focus on what is excluded, the industry could turn it around and focus instead on what is included,” she said.

Watch Moses Ojeisekhoba and Vicky Carter’s comments below:

Carter said the responsibility for providing clarity on cover fell on both brokers and underwriters.

“We should take responsibility as brokers for outlining the policy terms to our customers. There should also be responsibility in the relationship between brokers and underwriters to make sure policy wordings are understood.”

Ongoing disputes related to Covid-19 business interruption claims have dented public perception of the industry in recent months.

“Ambiguity over coverage has been a major factor in challenging the industry’s reputation,” Carter said.

Stephen Catlin, chairman and CEO of Convex, told the panel discussion: “Some of the comments made by the industry about coverage and business interruption exposure have been unfortunate.

“You cannot say ‘I never intended to cover this and I’m not paying the claim’ if the contract wording says that you do cover it,” he said.

“We should recognize we were clumsy and make sure we are not as clumsy in the future.”

Isabelle Santenac, EY’s global insurance leader, said the perception had been that the industry was not willing to fulfil its obligation to pay.

“The debate on damage and non-damage business interruption is very difficult for most people to understand as the consequences are the same for their business,” she said.

She said the fragmented response of the industry had “added to the cacophony” around Covid-19 claims, with the sentiment that the industry was not willing to take the pain from the pandemic exacerbated by pressure from governments and regulators and amplified by media coverage.

Watch Stephen Catlin and Isabelle Santenac’s comments below:

John Neal, CEO of Lloyd’s, acknowledged there was work to be done to improve the clarity of wordings.

“I looked at a wording the other day and the sentence was 89 words long – we cannot expect people to understand that,” he said.

“Some BI policies have not performed as customers expected,” he added. “But equally, we know that most BI policies were not designed to provide this type of cover. If they had been, they would be charging a much higher premium.”

The panel was hosted by The ReInsurer as part of our ongoing Reinsurance Month, and sponsored by EY.

Watch our first virtual panel debate in full: