Executive panellists at the S&P Global Reinsurance Conference have warned that re/insurance industry losses due to COVID-19 are “by no means over.”
Charles Mathias, Group Executive Director and Group Chief Risk Officer at Fidelis Insurance Holdings, suggested that many companies may have reserved on the basis that the pandemic would be over by now.
In particular he noted that the reporting of casualty losses has seemingly been “very patchy,” with some firms reporting an overall loss figure that includes substantial casualty costs, and others reporting virtually no casualty component at all.
“That inconsistency, I would think, is indicative of again people not having put reserves up yet which they will have to do at some point,” he said.
“So, for all those reasons … I’m afraid that this is by no means over and it is not a fully reserved loss.”
Also sitting on the S&P conference panel was Mike Sapnar, President and CEO, Transatlantic Holdings, who agreed that further COVID losses were inevitable in Q4 and heading into 2021.
“I don’t think that the losses have been fully booked by any stretch of the imagination,” he asserted.
Sapnar pointed to continental Europe as an example, where most carriers have significant exposure and have not reported any claims, or are just about to begin reporting claims to their catastrophe programs.
“I would be surprised if reinsurers have adequately put up reserves for those potential losses because there will be coverage to discussions,” he said. “And, frankly, those original insurance companies are still working out what their losses are. And, let’s not forget we’re in the live cat. I mean this isn’t over yet.
Also, on the topic of event cancellation, Sapnar warned that many re/insurers may not have provisions in place for further losses, even though it seems very likely that events will continue to be cancelled through Q4 and into the first quarter of next year.
“There may be some companies that have raised loss picks for lines of business like accident and health, mortgage, credit and surety, but I’m not sure we’ve fully realised all of those potential impacts, either,” he added.
“I’m not trying to be fearmonger here, I’m just saying there’s a fair bit of uncertainty. And if you look at the FCA ruling and some of the coverage offered in Europe, as Brian pointed out, there is no way that all of those losses have been recognised through the third quarter,” Sapnar concluded.
“In fact, the FCA only really came at the tail end of the third quarter, with people still getting to grips with what it meant. So, I think there’s certainly more to come.”