The year 2020 shall always be remembered by insurers. The coronavirus that emerged in November 2019 spread rapidly from a localized contagious disease to a pandemic, bringing the global economy to a halt.
Insurers who, at the beginning of 2020, considered themselves unaffected by the pandemic have found themselves, a few months later, evaluating in thousands and sometimes billions of dollars the cost of Covid-19 on their accounts.
The pandemic, now considered as a major event, puts a sector, already under pressure at grave risks.
From the macro-economic point of view, the insurance business has been evolving for several months in a particularly degraded business environment, not favorable to any development: loss of several GDP points for almost all the States, disruptions of the production and distribution chains, fall of investments, unemployment and bankruptcies on the rise, changes in the consumers’ behavior. At the end of 2020, the losses to the world economy amount to several trillions of US dollars.
The same alarming finding applies to insurance companies that have been strained for several years because of a decrease in profitability. The Covid-19 catastrophe is only worsening an already worrying situation.
With a sharp decline in turnover, insurers are trying as best they can to close the 2020 financial year without too many losses. Their results are heavily impacted by the losses sustained in health, event cancellation, marine, credit, business interruption and cyber criminality classes of business.
Rating agencies are already planning to downgrade the ratings of insurers and reinsurers.