Insurer drops disease coverage during pandemic
Queensland corporate giant RACQ will no longer cover the transmission of diseases in its policies as the spread of COVID-19 rocks the global insurance industry.
RACQ wrote to members last month notifying them that cover for the transmission of disease "including any virus" by "any method, including by air or bodily fluid" would be excluded from their home policy.
RACQ Insurance Executive Tracy Green said the exclusion of disease came after the company's reinsurers - global organisations which provide financial protection to insurance companies - removed the protection for disease due to the unknown liability brought on by COVID-19.
"That is why we wrote to our members to inform them that from August 1, 2020 in some limited circumstances for our household, motor vehicle, boat and body corporate insurance policies, we would not cover losses directly related to disease," Ms Green said.
"This was to make sure our insurance cover could remain affordable and valuable to our members - the majority of which won't be impacted negatively by this change."
It is understood the change will affect few customers, with disease claims not high on RACQ's list of liabilities.
Ms Green said the disease exclusion was not specific to COVID-19.
"It applies to all communicable diseases, or the fear or threat of such, and any loss or damage arising from such," she said.
"The current pandemic has highlighted a number of unexpected and unmodelled risks emerging that has led to the withdrawal of cover globally."
She said RACQ could reintroduce disease cover when it negotiates and renews its annual reinsurance treaty.
"We will be closely monitoring the reinsurance market's developing response to disease exclusions generally, and the COVID-19 pandemic specifically, with a view to obtaining the most favourable coverage available for FY22," she said.
Originally published as RACQ drops disease coverage during pandemic