It Is Harder to Insure Face to Face Industries : Here’s Why

Photo by Joshua Rodriguez on Unsplash

the UK and the US reel from the effects of the COVID-19 pandemic and these sprawling economies start opening for the general public, insurance giants are warning their retail clients about an upcoming threat which was previously suspected of being innocuous.

In a recent press release published by EIOPA, the European Insurance and Occupational Pensions Authority, top executives marked retail and leisure as being inherently vulnerable as a majority of their revenue depends on face to face interactions with the general public.

But, the question is, why is EIOPA and other similar insurance bodies now gauging these industries as assailable?

Let us understand.

An Autopsy of Face to Face Industries

Photo by Joshua Rodriguez on Unsplash

As a member of the general public, if you have ever shopped from a retail store or flown in an aeroplane, you are well aware of the fact that a majority of the revenue these industries generate is dependent on face to face regular interactions with the general public. Since these industries inherently depend on customer walk-ins and their subsequent interaction with staff members, the question now being asked is, what happens when there is another pandemic leading to subsequent nationwide lockdowns?

As many of us observed in the whole of 2020 and the majority of 2021, industries which depend on in-person customer interactions took the biggest hit in terms of earned revenue, mainly due to the fact that if customers aren’t walking through the door and availing their services, how do they generate revenue in the first place?

Although a majority of these institutions are insured for losses caused by non-payment for supplied goods and services, there is a ceiling until which insurance companies are willing to honour their claims.

A recent metric released by International Credit Insurance and Surety Association indicated that in 2020, the global insurance industry paid out a cumulative sum of €3.8bn in claims, which is 12% higher than the previous year, and this alone is indicative of the vicious cycle insurance companies will fall prey to, lest there is another pandemic in the future.

As Professor Jean-Jacques Muyembe Tamfum (the scientist credited with the discovery of Ebola) recently noted in an interview to BBC, the next pandemic is already looming on the horizon, and if we don’t learn, from our mistakes, the impacts of this will be severe than that of COVID-19.

How Are Businesses Combating?

Photo by Gene Gallin on Unsplash

Although a majority of businesses were able to renew their insurance for the next year, there are notable strives across industries in an effort to mitigate this crisis.

Retail to eCommerce

One of the biggest advances the retail industry has made over the past year is by migrating a majority of its assets from offline to online. Although the transition was slow in the beginning, it quickly became a phenomenon across nations as an increased number of retail businesses embraced an eCommerce business model over the traditional retail outlook.

As a recent Statista survey notes, that the COVID-19 pandemic has increased the pace of eCommerce adoption by 25% since a significant number of small and medium-sized businesses are now actively choosing to either maintain a completely online presence or stick to a hybrid model; and this change is being actively encouraged by insurance companies as businesses with an eCommerce model are now being offered higher coverages for an affordable premium.

Leisure at Home

Along with the retail industry, leisure too is making a transition to a completely online presence. With the exception of malls and amusement parks, almost all leisure activities which can be enjoyed at home are being rendered online, and a recent survey conducted by industry research firm IBIS confirms this fact as spending on online leisure activities increased by 15% in 2020, amidst the pandemic.

Although social distancing and lockdown norms are now being relaxed in several parts of the globe, industry experts expect this trend to continue as consumers are now more inclined to stay at home in an effort to minimize their time outside.

The Way Ahead

Photo by Alex Robert on Unsplash

In my personal opinion, it is too early to say where this transition will take us, however from the data at hand; one aspect can be emphasized that in the future, insurance companies will favour those who have the resources to best survive blows to their business, whether that be in retail or leisure, as with everything else in life, there is a ceiling until which claims can be honoured, beyond which we need to tread on our own.

What do you think? Let me know by commenting below.


  1. Covid risks making face-to-face sectors harder to insure, regulator says [Link]
  2. Stopping the next one: What could the next pandemic be? [Link]
  3. Top Industries Affected by Total Recreation Expenditure [Link]
  4. E-commerce worldwide — Statistics & Facts [Link]



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