A recent study on the impact of the Covid-19 on risk exposure of global insurance firms has stated that the outbreak of the virus will compel global insurers to pay $110 billion claims this year.
The report by Allianz Global Corporate and Specialty (AGCS), a business unit of Allianz Group, discovered that the Covid-19 pandemic, has reduced risk in some areas while, at the same time, changing and heightening it in others.
The Chief Claims officer of AGCS, Thomas Sepp, said the wider changes in society and industry brought about and accelerated by the pandemic were likely to have a long-term impact on claims patterns and loss trends in the corporate insurance sector.
“The growing reliance on technology, shift to remote working, reduction in air travel, expansion of green energy and infrastructure and a rethinking of global supply chains will all shape future loss trends for companies and their insurers.
“Estimates vary, but the insurance industry is currently expected to pay claims related to the pandemic of as much as $110bn in 2020 according to Lloyd’s.”
Sepp, said AGCS alone had reserved about €488 million (US$571 million) for expected Covid-19 related claims, especially for the cancellation of live events and the disruption of movie or film productions in the entertainment industry.
“We have seen claims in some lines of business, such as entertainment insurance, surge during Covid-19, while traditional property and liability claims have been subdued during lockdown periods,” said AGCS’ Global Head of Claims, Philipp Cremer.
He, however, said there was still the potential for claims to occur as factories and businesses restart after periods of hibernation, and given the longer development patterns for third-party claims in long-tail lines.
Analysing the various sectors’ experience, Cremer, said claims’ notifications from motor accidents, slips and falls or workplace injuries slowed as more people stayed at home.
He added that with the temporary closure of many shops, airports and businesses during lockdowns across the world, AGCS also noticed a positive impact on US claims settlement from the suspension of courts and trials.
“Some claimants and plaintiffs have been more open to negotiating settlements out of court rather than opting to wait a long time until their case is admitted,” a trend also highlighted in another recent AGCS publication on liability loss trends.
In general, he said claims activity was likely to pick up again following resumption of economic activity.