Customer claims expected to exceed $100bn, while volatile financial markets dent reserves

"Insurers are facing a double hit from coronavirus. Claims from customers could pass $100bn in total, while there has also been a hit to reserves from volatile financial markets. Insurance and reinsurance prices had already been rising before the virus hit. The industry had been reeling from several years of relatively expensive natural catastrophes, while compensation payments awarded by US juries had also been pushing up the size of insurance claims."

Oliver Ralph FT 26 May, 2020

Higher prices are a challenge for businesses suffering the financial consequences of coronavirus on economies worldwide. Insurers must balance the need to increase premiums against a reluctance to buy- not helped by the backlash against many insurers not paying out on business interruption caused by covid-19.

The hard market may continue for a year or two as these counter-balancing forces impact pricing, selling and buying.

Yet more pressure to shore up reserves and pay attention to reducing costs through digital acceleration.