Many economic sectors are suffering the effects of the COVID-19 pandemic. In particular, social isolation is having a devastating effect on the insurance industry. New business in motor insurance, for example, is declining as people drive less due to social distancing.

"We expect the financial impact of coronavirus upon (re)insurers to be specific to the circumstances of each enterprise-the classes and mix of business they underwrite, their pricing and reserving, policy wordings, and reinsurance coverages," warns Neal Bauman, Global Insurance Leader in Deloitte, in an article published on his firm’s website.

The potential long-term impacts on companies in this sector would be as follows, according to Bauman:

1) the consequences on the stock market may put pressure on the (re)insurer's balance sheets.

2) there would be some time-lag for insurance claims to be notified to assessed or insured and to be paid.

3) (Re)insurers with diversified risk portfolios will be insulated from losses arising from this pandemic. Those with an elevated concentration of classes of business exposed to COVID-19 could be negatively impacted.

Nicolas Berry and Laura Hodgson, lawyers from Norton Rose Fulbright, said this crisis will test insurers' resilience and explained that low-interest rates and declining asset values could harm life insurance companies. These lawyers also indicated that the lines in this industry that may suffer the most from the effects of COVID-19 will be events, trade credit insurance, business interruption, travel, directors and officers liability, cyber liability.

Due to the economic consequences that stakeholders will face, Baumann recommended that they respond effectively to their clients' queries and claims by implementing contingency and business continuity plans. It also recommends maintaining a proactive attitude to generate confidence in the regulator and the markets.

For more information about the Insurance sector impact of COVID-19, please go to: 

https://www2.deloitte.com/global/en/pages/about-deloitte/articles/covid-19/understanding-covid-19-s-impact-on-the-insurance-sector-.html

https://www.regulationtomorrow.com/eu/the-insurance-sector-and-covid-19-how-has-the-pandemic-affected-the-uk-market/