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Industry survey reveals divided census over 2021 P&C covid losses

1st March 2021 - Author: Staff Writer

A comprehensive survey of Reinsurance News’ industry contacts has revealed a clear divide in expectation for 2021’s eventual COVID-19 impact on the Property & Casualty segment, with 27% of respondents feeling the figure will fall over $100 billion.

A further 27% felt the eventual loss would land between $70 billion and $100 billion, while 25% estimated $50 billion -$70 billion.

22% saw $30 billion – $50 billion as the most likely range.

Analysts at investment banking firm Stonybrook Capital said most US property and casualty firms managed to cover their cost of capital in 2020, but that the key economic factor would depend on the length and depth of continuing lockdowns.

Indeed, a number of industry players have attempted to calculate the eventual impact COVID-19 will have on P&C re/insurers, as well as asses the impact it’s already had.

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In November, Moody’s provided a stable outlook for the US P&C commercial insurance sector in 2021. Analysts highlighted an acceleration in price increases and solid capital positions.

Meanwhile, AXA reported an 18% dip in net income to €3.164 billion for 2020 and a 34% dip in underlying earnings to €4.264 billion, driven in part by the impacts of the pandemic on the performance of its AXA XL P&C business.

AM Best reported a reduction in P&C premiums in 2020 due to the pandemic. The drop in premiums ran counter to the overall industry trend, which had seen premium volume rise for most of the 33 P&C lines through to the end of 2019.

Though the infectiousness of the virus, as well as the constant logistical hurdles nation states have faced in trying to suppress it’s spread, are both factors which could well see P&C re/insurers shoulder a loss over $100 billion, it will be intriguing to see how the industry adjusts and works towards limiting losses.

Regardless, the lessons learned and internal adjustments will undoubtedly strengthen the segment’s resolve and effectiveness for future catastrophes and pandemics.

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