A panel of property and casualty (P&C) insurers at the S&P Global Ratings’ Annual Insurance Conference has raised concerns about the lasting medical and economic impact of the COVID-19 pandemic, as well as the potential headwinds that may follow it.
During the virtual conference, moderator Kevin Ahern, Managing Director and Analytical Manager, S&P Global Ratings, noted that the US P&C market faces many headwinds, not just those related to COVID-19.
These include competitive pressures, the pricing/underwriting/reinsurance environment, and evolving regulatory and legislative developments.
S&P analysts currently believe that COVID-19 related losses will total between $15 billion and $30 billion for the US P&C market alone over the next two years.
“I never envisioned managing through a global pandemic,” said Christopher Swift of The Hartford.
“Health and safety comes first, but the nature of the work is all encompassing, so it’s important to stay on top of it,” he noted.
“Clearly the challenge is how you are operating both internally and externally,” remarked W. Robert Berkley, Jr., of WR Berkley. “It calls for flexibility, but also for the ability to plan amid uncertainty.”
The panellists agreed that coverage for pandemic-induced business interruptions and losses will be a complicated issue for the industry to face, even though viruses are generally not a covered peril for commercial properties.
They added that workers’ compensation claims due to COVID-19 illnesses could be an inflection point, though, as states scrutinise policies given the rising number of these claims.
If coverage is expanded, insurers will need to evaluate this risk and price accordingly, panelists said.
The panel further discussed how insurers are coming to terms with social inflation, with Berkley suggested that “the industry was caught somewhat flat-footed” by the rising costs.
Another focus for the panelists was the pace and shape of the economic recovery, which depends on several unknown factors, such as the length of shutdowns, the speed of the economic recovery, and the possibility of a second wave of the virus.