AM Best has doubts on Europe; economic threats to insurers mounting
Insurance sector ratings agency AM Best is showing doubts about the European non-life insurance market, having downgraded the outlook for both the French and Spanish non-life sectors to negative.
Economic uncertainty, often exacerbated by the fallout from the Ukraine war, leads the list of reasons for the negative outlook in both cases.
“In particular, the threat of further inflation and additional supply chain disruptions following Russia’s invasion of Ukraine and the international sanctions imposed on Russia could undermine the economic recovery and so reduce growth prospects for insurers,” AM Best analysts spelled out in the review of France. “The potential emergence of new Covid-19 variants is also a source of uncertainty.”
Spanish economic growth looks stronger in the post-pandemic rebound, but growth rates in both countries “remain subject to significant uncertainty.”
Both countries face economic uncertainties tied to the lingering Covid threats, further inflation and supply chain disruptions amid the Ukraine war and sanctions. Both could be “significantly affected” by the energy price shock.
Spain is called out for “increasingly volatile weather conditions” as a claims driver, despite the “effective” nature of coverage from the government's mandatory nat cat scheme “Consorcio.”
The Spanish industry has done little to model the impact of climate change and get ahead on pricing, AM Best warned.
AM Best had recently held the outlook for the UK non-life sector at negative. The three announcements are the first on the European non-life outlook released to date in 2022.
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