Moody’s Investors Service has maintained its stable outlook for global property and casualty (P&C) insurance in 2020, as solid capitalisation and pricing trends continue to offset negative factors.
Analysts believes that the global P&C sector will continue to benefit from overall economic growth in 2020, even as momentum begins to slow, as well as solid capitalisation and constructive pricing trends.
However, these factors are tempered by increasing claim costs and low investment yields, which are expected to constrain profit margins.
P&C insurers are also faced with a persistent threat of catastrophes, Moody’s noted, with annual insured catastrophe losses trending ever higher.
But analysts still remain confident that P&C insurers will be able to manage these exposures through a combination of catastrophe modelling, underwriting, and reinsurance.
“P&C insurers are exposed to the economic consequences of climate change, mainly through its unpredictable effects on the frequency and severity of weather-related catastrophes such as hurricanes, floods, convective storms, droughts and wildfires,” said Moody’s Vice President Bruce Ballentine.
“Such shifting perils also represent an opportunity for P&C insurers to provide additional coverages and other risk mitigation products for clients,” he explained.
Moody’s added that technology driven start-ups could also create some disruption for certain insurance lines and functions over the next year, although this risk could be limited via partnerships and acquisitions.
