Menu

Reinsurance News

COVID-19 a threat to insurers positive momentum: OECD

6th July 2020 - Author: Luke Gallin

Analysis by the Organisation for Economic Co-operation and Development (OECD) warns that positive premium and investment income growth in 2019 for the majority of insurers might not be maintained in 2020 as a result of the ongoing COVID-19 pandemic.

coronavirus-covid-19-pandemicFor the majority of countries, gross written premiums increased in 2019, most notably in the non-life sector.

In real terms, the OECD reports that gross premiums grew in 24 out of 41 reporting countries in 2019, in both life and non-life sectors. In 12 other countries, only the non-life sector recorded growth and in four other countries, only the life sector reported growth.

In fact, the United Kingdom (UK) was the only country that experienced a decline in premiums in both life and non-life in 2019, as companies exited the domestic market in response to the country’s vote to leave the European Union (EU).

By country, trends in the life and non-life insurance sectors varied greatly in 2019, says the OECD. The organisation notes that growth in life premiums ranged from -29% in Lithuania to +42.2% in Turkey. In the non-life sector, growth of +173.4% was recorded in Luxembourg, while the UK non-life market declined by -23.6%.

As well as positive premium momentum across most countries in 2019, the OECD notes that many insurers also achieved positive real investment rates of return in 2019 in 13 out of the 20 reporting countries, regardless of whether they engaged in life insurance only, non-life only, or both.

The OECD notes that after a downturn in the final quarter of 2018, insurers might have benefited from a global recovery of stock markets in 2019.

Of course, by the end of March 2020, many countries around the world were under some form of lockdown amid government enforced restrictions designed to mitigate the spread of the novel coronavirus. And, according to preliminary data, the OECD warns that the current crisis could dent the recent positive premium and investment momentum reported by global insurers.

“For example, quarterly data from the Australian Prudential Regulation Authority (APRA) shows a decrease in gross premiums written for commercial motor vehicle and for professional indemnity in Q1 2020 compared to Q4 2020. The US NAIC’s snapshot for Q1 2020 shows a 4.5% increase in net premiums written for property and casualty compared to Q1 2019. This trend is likely to change from Q2 2020 onwards due to the economic impact of confinement measures implemented in US states in the latter part of Q1,” explains the OECD.

Adding, “The COVID-19 outbreak has also had a knock-on effect on financial markets and this is likely to affect the investment performance of insurers in 2020. Major stock markets fell in Q1 2020 (although many regained some of the losses in Q2).”

Print Friendly, PDF & Email

Recent Reinsurance News

Getting your daily reinsurance news from Reinsurance News is a simple way to receive only the reinsurance industry news that matters, delivered directly to your email inbox.

  • Only email is mandatory, but the more you tell us about yourself the better we can serve you in future!
  • This field is for validation purposes and should be left unchanged.

By submitting the form you are giving your consent to be emailed by us.

Read previous post:
Canopius launches property product to address ‘silent cyber’ gap

Global specialty re/insurer Canopius has announced the launch of a set of cyber property products for medium to large corporations across...

Close