Atlas Magazine July 2023

Covid-19, the real big crash test for insurers

The pandemic triggered by Covid-19 officially ended on 5 May 2023 in the eyes of the World Health Organization. This unprecedented event had a significant impact on the insurance industry. Not only did it affect all balance sheets, but it also introduced structural changes in the organization of companies, reshaping their approach to risk.
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The first finding to emerge from this full-scale crash test is that the pandemic led to a substantial increase in non-life loss experience. The latter is certainly high, but comes second after that of health, event cancellations, travel and restaurant and hotel business interruption.

The second consequence of the pandemic was the industry’s obligation to undertake a thorough reassessment of its risks, hence its quick response to the policyholders' needs and, above all, its commitment to innovate. In the health sector, for example, insurers extended their coverage to include screening tests and new treatments for the virus, while other companies even offered their customers telemedicine services.

Thirdly, the pandemic acted as an accelerator of the structural transformation of the business: working from home, mobility, development of new distribution and communication channels with policyholders.

Finally, in terms of figures, the pandemic has caused colossal losses to the global economy. According to some sources, the costs of screening for the virus amounted to 100 billion USD, travel cancellations amounted to 300 billion USD for global tourism, while the aviation market posted losses of 252 billion USD.

Compared with these figures, the 16 billion USD loss sustained by the world's top four reinsurers for the period 2020-2022 seems insignificant, which testifies to the resilience of the insurance and reinsurance industries.

Atlas Magazine N°203, July 2023

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