Covid-19 pandemic in France, UK and Spain: what impact on insurance intermediaries?

The Financial Conduct Authority (FCA) published early January the results from its survey of firms to determine their financial resilience and assess the potential impact of the Coronavirus (Covid-19) pandemic on their business activities. Meanwhile, in France and Spain, insurance intermediaries are showing resilience, despite growing fears about the consequences of the pandemic.



Through its surveys, the FCA tried to assess the real-time effect of the pandemic on the finances of the firms that the watchdog prudentially regulates. The surveys were sent to 23,000 regulated firms, and show that, between February (pre-lockdown) and May-June (during the impact of the first lockdown), firms across the sectors experienced significant change in their total amount of liquidity. The watchdog’s survey did not include the 1,500 largest firms in the UK financial sector, which are regulated by the Bank of England.
The results from the survey broken down by individual question can be found by clicking here:
The coronavirus (Covid-19) financial resilience survey data | FCA.

Here are the key findings of this survey:

  • Up to 4,000 financial services firms in the UK are at risk of failing due to the coronavirus pandemic;
  • Three sectors saw an increase in liquidity between the two reporting periods: Retail Investments (8%), Retail Lending (8%) and Wholesale Financial Markets (83%), the latter seeing the greatest increase.
  • The other 3 sectors saw a decrease in available liquidity: Insurance Intermediaries & Brokers (30%), Payments & E-Money (11%) and Investment Management (2%).
  • However, the watchdog said stronger markets and a return to economic growth would support UK financial services firms.

The area of insurance intermediaries and brokers saw a decline in terms of available liquidity: from £16.2 billion in February 2020 to £11.4 billion in May/June – their total liquidity resources went down because of the coronavirus crisis. Nevertheless, data on insurance intermediaries can be put into perspective, as, in both Total and Median data, insurance intermediaries’ cash inflow was sufficient to cover cash needs.

According to the FCA, 44% of the surveyed insurance intermediaries and brokers have furloughed staff and 19% have received a government-backed loan. The FCA urged caution about using the survey data to make predictions. In addition, it was also points out that the survey was conducted prior to the extension of the furlough scheme, developments in COVID-19 vaccines, and the announcement of new restrictions.



A study conducted by the investment bank Cambon Partners last May shows that a drop in turnover and profitability is anticipated by the whole sector. 26% of insurance intermediaries forecast a drop in turnover of around 20% and 23%, and expect a drop in profitability of around 10%. Faced with these rather gloomy economic forecasts, 75% of brokers and agents nevertheless state that they have adapted their development strategy (31% identified new activities/products to compensate for the drop in activity) and adopted defensive measures (25% froze ongoing recruitment).

For its part, AGEA, the national federation of general agents’ unions, conducted its own survey on the Covid-19 crisis among its members last summer. It emerged that more than half of the agents expressed fears about their future. Cancellations of policies, a drop in collections of premium, as well as competition from bank-insurance are their main causes for concern. Here are the key points of this survey:

  • 52% of agents expressed fears for their future.
  • 48.4% of Non-life agents noted, during the coronavirus crisis, a drop in collections of premium and therefore in commissions.
  • 36.8% of Life agents noted a drop in collections during the coronavirus crisis.

According to this survey, agents experienced a drop in collection of premium of between 1% and 10%. This decrease leaded to a drop in commissions. “Our analysis is that this drop in commissions is correlated with the companies’ support plans for professional customers. For example, when two months of premiums are refunded to a client, it is 20% less on the agent’s commissions,” explains Grégoire Dupont, AGEA’s CEO.

As for broker, PLANETE CSCA, the Union of insurance brokers in France, published a report last May , highlighting the fact that insurance brokers have shown resilience in their management of the crisis. According to this publication, they were able to adapt their working methods and their relationships with their clients, which were strengthened during the lockdown period. Despite these positive findings for the profession, the report states that insurance brokerage firms could also face economic difficulties if the economy as a whole were to experience difficulties due to the health crisis. It also points out that the economic crisis has not yet revealed all its effects.



Some lines of business, such as motor insurance, have been deeply affected by the pandemic, although non-life insurance as a whole is experiencing growth in its premium volume. Premium income at the end of 2020 amounted to 58,850 million euros, 8.3% less than the previous year, as recently announced by the Spanish Union of Insurance and Reinsurance Companies (Unión Española de Entidades Aseguradoras y Reaseguradoras, UNESPA). The association explains this drop mainly by “the economic paralysis generated by the outbreak of the Covid-19 pandemic and the measures taken to contain it”. Nevertheless, the association emphasises the “high” levels of solvency in the sector, “which far exceed the requirements of the regulations “. From the beginning of the pandemic, a large number of insurance companies have taken very favourable measures for their clients, such as:

  • The creation of an economic fund of solidarity of 37,000,000 euros to indemnify health professionals;
  • The exclusions related to epidemics/pandemics included in Life policies were not applied.

As for insurance intermediaries, it is important to highlight their commitment to their clients, helping them both to reconfigure their insurance programs (particularly in the event of an increase or decrease in insured risks), agreeing on new contractual terms and conditions, as well as deferring the payment of premiums. Insurance intermediaries, either in person and/or working from home, have redoubled their efforts to continue advising and attending to their clients adequately.

CGPA Europe Underwriting underlines the fact that, in Spain, there have been no claims against insurance intermediaries for BI losses arising from the Covid-19 pandemic.

Nevertheless, the last few months, difficulties have emerged in the renewal process of some accounts – mostly for industrial activities – as insurance companies are often willing to include a Covid-19 clause in their wordings, while their financial capacities are reducing and economic conditions tightening. As a result, intermediaries and insurers are concerned about the developments that will take place in 2021, due in particular to the disappearance of a large number of companies and a slowdown in the Spanish economy.