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COVID-19 to ‘turbocharge’ pricing trends, says WR Berkley

29th May 2020 - Author: Charlie Wood

As COVID-19 related losses and uncertainty permeates throughout the marketplace, W.R. Berkley leadership has told Credit Suisse that they expect prior pricing trends and Excess and Surplus growth to become ‘turbocharged’.

COVID-19Prior to COVID-19’s outbreak, WRB says P&C insurance industry was in a period of transition, with acceleration in insurance rates driven primarily by the low interest rate environment, an emboldened/empowered plaintiff’s bar, and discipline returning to the re/insurance industry.

E&S lines carriers were also seeing an acceleration in the flow of applications out of standard markets into the E&S markets, where WRB is growing disproportionately.

In a post-coronavirus market, WRB sees parallels to the 2000-01 insurance environment, which saw pricing strengthen before and then accelerate further subsequent to the 9/11 terror attacks.

WRB says it has reinsurance in place that would help manage COVID-19 losses, including workers’ comp.

That said, it has not seen overwhelming levels of workers’ comp claim activity and expects claims to be more modest than some have indicated.

In addition, WRB senses that reinsurance contract “hours clauses” would be unlikely to keep its reinsurance protection from kicking in under most scenarios.

For WRB, Non-COVID related claims are down considerably, given people are working from home.

The company has also seen claimants more willing to settle due to the logjam in the court system caused by shutdowns.

With regard to COVID-19 claims, by line of business, WRB management suggested that workers’ comp may only end up being a modest issue.

WRB expects business interruption losses to be less of an issue than some industry participants have suggested, and it reiterated the “vast, vast majority” have virus exclusions on the property front.

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