Menu

Reinsurance News

COVID wordings gap could hurt some insurers: AM Best

14th October 2020 - Author: Matt Sheehan

Analysts at AM Best have warned that gaps in policy wording around the COVID-19 pandemic could still hurt some primary insurers, despite recent efforts to exclude coverage.

warranty and indemnity contractThe rating agency noted that reinsurers were quick to react with exclusionary language during the mid-year renewals, due to concerns about the aggregation of exposure.

Likewise, commercial property policies have mostly been able to include explicit language excluding pandemics from coverage.

However, general liability policies such as umbrella, professional liability and excess liability have been less explicit, AM Best says.

Whereas reinsurance companies were able to tighten their wordings more readily and easily, analysts suggest that primary insurers may have to be driven by the legislative timetable due to court cases over the COVID-19 business interruption debate, as well as other issues.

“Primary insurers still face uncertainty about their pandemic exposure, with delays in regulatory processes,” AM Best said.

“The gap between primary insurance policies and reinsurance may expose smaller and medium-sized insurers that have concentration issues and are thus vulnerable to rating downgrades and insolvencies,” it added.

If AM Best is correct, primary insurers could find themselves on the hook for losses that their reinsurance does not cover.

This could expose some insurers to much larger losses than they had been anticipating, if they are concentrated on certain areas of risk.

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:
PrimeOne adds Eric Jarvis as COO

PrimeOne Insurance Company has announced the appointment of Eric Jarvis as Chief Operating Officer. Jarvis brings 21 years' experience to...

Close