2020, what a waste!

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This resilience is accounted for by the fact that pandemic risk is generally ruled out from insurance policies and reinsurance treaties.

The crisis is weighing less heavily on insurers than on public finances, bound to support entire sectors of the economy, whatever the cost. The cost is even heavier for the public authorities, who turned out to be totally unorganized and hardly prepared when the pandemic struck.

Impacted to varying degrees by the declining economic activity, the lockdown measures and a financial market at its lowest point, the vast majority of insurers and reinsurers have reported 2020 results that are clearly down in comparison with the previous years.

In terms of premiums, Swiss Re's projections call for a decline in global sales of around 1.4% in 2020 after increases of 2.3% in 2019 and 4.8% in 2018. In 2020, the fall in life premiums would be more significant than that of the property & casualty class of business.

This decline in premiums comes at a time when the market is experiencing a higher natural catastrophe loss than in 2019. In addition to this loss experience, the 2020 pandemic is poised to cost nearly 4.7 billion USD to the Munich Re group, 3.9 billion USD to Swiss Re and 5 billion USD to the Lloyd's of London. These losses reported for 2020 did not include any of the capital losses reported as a result of the stock market crash and the economic crisis.

As a consequence of the decrease in premiums and increase in claims, insurers' technical results are declining with combined ratios on the rise. As a result, the year 2020 will end with net profits very often divided by two or more.

After a stressful year in 2020, insurers will have a hard time recovering their profitability in 2021, especially in view of the market outlook still looking bleak.

Atlas Magazine N°181, May 2021 [1]