Insurance market Lloyd’s of London has said it expects insurance claims from coronavirus related issues to be between $3bn and $4.3bn. That would be the highest insurance claims since the Twin Tower attacks on 11 September 2001 in the US.
Lloyd’s said that if the lockdown that is currently imposed in many countries across the world continues into another quarter, the losses could rise further.
The novel coronavirus pandemic related costs are hitting insurers all around the world even though many of the people who were planning to file claims related to coronavirus are finding that it is not covered by their insurance policies.
The total impact on the insurance industry was likely to be far bigger after all factors were taken into account, Lloyd’s said.
“The estimated 2020 underwriting losses covered by the industry as a result of Covid-19 are approximately $107bn,” it said. “In addition, unlike other events, the industry will also experience falls in investment portfolios of an estimated $96bn, bringing the total projected loss to the insurance industry to $203bn.”
Zurich Insurance said that in the first quarter, it had made bookings of $280 million on coronavirus claims.
“The impact of claims related to the COVID-19 outbreak and the sharp falls in financial markets in the latter part of the first quarter are expected to remain a 2020 earnings event,” the company’s Chief Financial Officer George Quinn said in a statement.
After booking of $280 million for property and casualty claims related to the coronavirus pandemic in the first quarter, such claims could reach a total of about $750 million this year, Zurich Insurance Group said.
“The impact of claims related to the COVID-19 outbreak and the sharp falls in financial markets in the latter part of the first quarter are expected to remain a 2020 earnings event,” Chief Financial Officer George Quinn said in a statement.
“Group solvency remains strong and together with the diversity of our business and our conservative balance sheet, I am confident that the Group is well placed to manage the current challenges.”
There was a 5 per cent growth in premiums in the P&C business in North America because of rate increases while there has also been strong premiums growth in Britain, Germany and elsewhere in Europe, the company said.
At the same time there was a drop of 24 per cent slump in new business in life insurance which has brought down annual premium equivalents by 19 per cent to $958 million because of a lack of face to face meetings and sale with customers because of the lockdowns imposed by many countries in Asia Pacific and Brazil, among other countries, to slow down the spread of the pandemic.
The insolvency ratio of the group was down significantly to 101 per cent from 129 per cent under the Swiss owner’s own economic modelling but remained within target range.
(Adapted from BBC.com & CNBC.com)