Andrey Krupnov: Working from home will be more, insurance will be more expensive

Risks "udalenka".

The policyholders of private property and domestic property in the next few years may face the rising cost of insurance if working from home will become more popular. The reason, according to the research company GlobalData, is that risks will move from the insurance of commercial property to private property, and with them, “moves” and award.

At the time of the exclusion, insurance policies home contents fully cover the risks arising when working from home, but policyholders have to change coverage terms, when isolation is completed. Chances are that many people and companies during this time appreciated the benefits of working from home. It gives employees the opportunity to observe a better balance between work and life and helps employers to save overhead costs, so most likely, this type of employment after a pandemic is much more common than before.

The analyst GlobalData Yasha Kuruvilla commented: “Working from home can increase the risks of a property due to being inside expensive equipment, and also due to increased flow of visitors and create a risk of theft of property and responsibility. On the other hand, companies no longer need as much office space, on their territory will happen less accidents, which will reduce the size of premiums on insurance policies of commercial real estate. This will shift the risks from the commercial sector in the private sector of real estate will change accordingly and the insurance premium for each of these lines of business.

At the British insurance companies Aviva, AXA, Zurich, RSA and NFU Mutual have a strong position in the commercial sector, and the sector of private property. Thus, they will retain their business in the event of the predicted shift. The biggest beneficiary may become Lloyds Banking Group, which is the second largest company, insuring property of individuals. on the Contrary, Allianz, focusing primarily on corporate insurance, it may be the company that will suffer the greatest losses if the redistribution of the premiums between sectors will take place.

If the insurance market began to prepare for some changes, so these changes are really real. Don't want to delve into the prospects of the commercial real estate market – let them realtors have a headache – but in terms of operational risks, the situation, in my opinion, is not as straightforward as presented in the material. A large number of risks realized in periods when the building or facility is in operation (i.e. it operates all life support systems) but not used directly. In fact, the system “smart home” is primarily designed to compensate for the absent master's view on the state of critical systems in the house.

In this sense, the situation when a person leaves his home for a long time associated with driving to work, and is in it constantly, will lead, rather than to growth, and to reduce the probability of major risks: fire, flooding and theft. But only under certain conditions. The transition to work from home will increase the load on the power grid and running water in the house, and, due to the fact that the attention of the tenants will be focused on work duties, do may initially increase the likelihood of adverse events.

Solution is a 'smart home' system, which “do not forget” included a kettle or insufficiently tightly closed faucet (the owner was in a hurry on a video call). Thus, in contrast to the standard scenario of its usage, here the residents will have the opportunity to respond immediately to the warning system and to eliminate possible trouble in the Bud.

So I would rather be talking about the growth of risks to the deserted office buildings, but, obviously, raise the insurance premium for them is extremely problematic. But do not reduce it in both segments. Therefore, the shift at least the sales efforts of insurers of commercial retail real estate is quite likely.

If this happens, it will be interesting who will have to cover additional insurance costs. That is, whether the employers (who are switching to udalenku will save not only on insurance but also on renting office space) to compensate employees with additional insurance costs? Or there will be new products in the likeness of the LCA where the employer, as a financial person concerned would be insured, and the insured will be the workers with their real estate and home property?

The important question raised in the material, how much the insurance premium will flow not just from one business line to another, but from companies having a strong brand in the sector of corporate insurance for companies with a leading position in retail. Insurance, property – this is not the only species that will be affected by the ongoing transition to udalenku. So companies specializing exclusively in corporate insurance, an urgent need to pump the retail sale. Can be very handy.

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