The novel coronavirus has seemingly put all businesses in Canada, including the P&C industry, in a long-term holding pattern that that is likely to last until a vaccine is available. That could be anywhere from one to two years, according to various published reports.
That feels like an awfully long time. It has been “only” nine weeks since the World Health Organization declared the novel coronavirus to be a global pandemic. Since then, quarantine measures to prevent the spread of the virus have more or less placed the Canadian economy into the state of an induced coma, with six million Canadians applying for emergency relief benefits, as reported by CBC.
At the beginning of the crisis, financial analysts predicted the Canadian P&C industry would be able to manage through the pandemic in the short term. But in the medium- to long-term, they warned, the industry’s financial situation would get more difficult. Which begs the question: What counts as “medium-term”? And are we there yet?
As far as the economy goes, this may well become known as ‘The Lost Year [or Two] of the Coronavirus.”
Of course, the Canadian economy will re-open in fits and starts while we wait for the vaccine to be developed. Provinces are already allowing some non-essential segments of the economy to return to operations, albeit under restricted conditions so as to keep infection rates down. (Insurance is an essential service, so it has been allowed to keep its offices open in situations when employees cannot work from home.)
But until infection rates are brought to a standstill, and until medical health professionals are able to understand the virus better, business owners — your commercial clients — can look forward to the prospect of repeated business closures hanging around their necks like an albatross, depending on how many waves of viral infections we see down the road. In the absence of a vaccine, keeping businesses running over the next year will depend on our ability to test for the virus, contact trace, and maintain at least a semblance of collective self-discipline around social distancing measures as required by health authorities when circumstances demand it.
This new economic reality will make insurance — indeed, any product — a tough sell over the next year or two, no doubt. Brokers and insurers are still working out relief packages for commercial clients, and that seems to the focus of the industry’s efforts these days (including relief for auto and home insurance clients). But even as they are dealing with jittery commercial clients, the industry must grapple with a very important question: How are we sell our way through The Next Great Recession?
One clue comes from author Dave Chase, who wrote the following in a blog for iMedia: “What do GE, Disney, HP and Microsoft have in common? They were all startups during steep declines in the U.S. economy. GE started during the panic of 1873, Disney started during the recession of 1923-24, HP began during the Great Depression, and Bill Gates and Paul Allen founded Microsoft during the recession of 1975.”
Entrepreneurial insurance companies and brokers should seek opportunity in those sectors of the Canadian economy that they expect to start up, bounce back quickly, or even thrive after the business lockdowns. In short, the secret to selling during ‘The Lost Year of Coronavirus” may involve identifying pandemic-proof economic sectors that can generate at least some premium growth while the virus runs its course through the Canadian economy.