The quality of recovery for very high and high insurance penetration countries is better than pre-loss levels, and the reverse is true for countries with lower insurance penetration although the differences are quite small. There is potential for product development in terms of “building back better”.
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COVID-19 “not a capital event”, 3% decline in global reinsurance capital in the first half of 2020: Willis Re
Total capital dedicated to the global reinsurance industry was USD 587 billion at 30 June 2020, combined ratio worsened from 94.9% in the first half of 2019 to 104.1%, due to COVID-19 losses which added 11.1 percentage points to combined ratios on average. However, on an underlying basis i.e. normalising COVID-19 and catastrophe losses and excluding prior year reserve development, the combined ratio improved from 100.5% to 98.6%.
James Kent, Global CEO, Willis Re, said: “This half-year analysis shows a reinsurance market understandably in a state of change. While reinsurers have so far resiliently shouldered the combined effects of COVID-19 losses and investment market volatility, underlying profitability remains challenging. Uncertainty therefore remains, particularly over the potential impact of COVID-19 on long-tail lines, which is driving reinsurers to deliver additional improvement in underwriting returns. We expect to see further reinsurance market discipline as well as continued differentiation between regions and clients based on past performance and underlying risk.”
Learned from COVID-19 Pandemic to mitigate the risks of Climate Change?
The work to promote resiliency in the face of climate change must be collective in nature, with the insurance industry having an important role to play. Better risk transfer solutions and a higher take-up rate of insurance across communities means a faster recovery. The insurance industry has an advanced understanding of climate risk and extreme events, and its modelling, analyzing and forecasting capabilities offer vital insights to other participants in the resilience ecosystem, helping them better comprehend the risks, identify potential weaknesses and plot a course toward prevention.
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