The COVID-19 pandemic will likely cause claims trends and risk exposures to evolve in the mid-and long-term, according to a report from Allianz Global Corporate & Specialty (AGCS).
The report notes how, with the reduction in economic activity during lockdown phases, traditional property and liability claims have been subdued, most notably in the aviation and cargo sector.
The aviation industry has seen few claims directly related to the pandemic to date.
In a small number of liability notifications, AGCS notes that passengers have sued airlines for cancellations or disruptions.
Slip and fall accidents at airports – traditionally one of the most frequent causes of aviation claims – have declined with the massive reduction in global air traffic, which fell by a record 94% year-on-year in April 2020.
Looking forward the growth of home working means that companies may have lower property assets and fewer employees on site in future, but there would be corresponding changes in workers` compensation and cyber risks.
In addition, COVID-19 is accelerating awareness around the vulnerabilities of complex global supply chains and moving forward, many businesses are expected to review and de-risk their supply chains and build in more resilience.
This could involve some reshoring of critical production areas because of disruption caused by the pandemic. Such a move would likely impact frequency of claims and the costs of any future business interruptions.
“The coronavirus outbreak has reduced risk in some areas while, at the same time, changing and heightening it in others. The wider changes in society and industry brought about and accelerated by the pandemic are likely to have a long-term impact on claims patterns and loss trends in the corporate insurance sector,” said AGCS Chief Claims Officer Thomas Sepp.
“The growing reliance on technology, shift to remote working, reduction in air travel, expansion of green energy and infrastructure and a rethinking of global supply chains will all shape future loss trends for companies and their insurers.”
Estimates vary, but the insurance industry is currently expected to pay claims related to the pandemic of as much as $110 billon in 2020 according to Lloyd’s.
AGCS alone has reserved about $571 million for expected COVID-19 related claims, especially for the cancellation of live events and the disruption of movie or film productions in the entertainment industry.