Pandemic-hit insurers face unique challenges for 2020, says Fitch
The continuation of the coronavirus (COVID-19) pandemic into hurricane season is likely to compound challenges for insurers if a major event occurs in 2020, according to a new report.
Fitch report warned that the natural catastrophe losses, particularly severe hurricane-related events, represent a major source of loss volatility to property/casualty insurers, and one isolated large hurricane could have a significant effect on industry capital.
Fitch Ratings currently has a negative sector outlook on the P&C and global reinsurance sectors, reflecting coronavirus uncertainty and near-term market conditions and profitability challenges.
The agency stated that the potential effects on capital and operating challenges related to the pandemic adds incremental vulnerability to insurers from near term catastrophe events. Although, it noted, the industry capital strength remains very strong, providing most individual re/insurers with an ability to absorb near-term large insured losses.
"In the event of a major hurricane landfall in 2020, property insurers' claims assessment and settlement expertise will be tested by reductions in economic activity and mobility resulting from public policy efforts to combat the pandemic," said Christopher Grimes, director, Fitch Ratings. "Typical disaster response practices to prevent injuries and losses from an oncoming storm, including evacuation and mass sheltering plans will need to be re-evaluated in light of public health concerns."
"The coronavirus pandemic creates unique challenges for the (re)insurance industry during the 2020 hurricane season, but the industry remains well positioned to absorb the risk of an above-average season," added Grimes.
