COVID-19 Outbreak

ORIGIN of the virus

The virus SARS-CoV2 transmissible to humans was identified for the first time in January 2020 in China. The disease caused by this coronavirus is named COVID-19 by the World Health Organization (WHO). The virus may induce severe medical conditions such as respiratory difficulties. It is a dangerous virus as it is highly contagious and the infected people who are asymptomatic can pass it to other people unknowingly.

Therefore, the disease has spread out to the world, causing many deaths. The COVID-19 impacts on the world have been qualified by the WHO as a pandemic since the 11of March 2020.

As a result, globally most of the continents are running slow as most of the governments have enforced a lockdown for their countries. This has led to the transformation program of companies, in turn leading to a huge hit on the economy. The insurance sector is not on the sidelines.

WHO information

In accordance with its assignment, the WHO has carefully monitored the covid-19 pandemic to allow all countries to have essential information and statistics to fight efficiently against its effects on public health.

On its website , you can find medical experts’ advice for prevention against the pandemic, as well as some statistics that have been set up, which are also accessible here:

Covid-19 has hugely impacted the countries and their lifestyle except for Africa, where it is less widespread.

First Covid-19 identified impacts on the Insurance Industry

The current covid-19 pandemic has had an important effect on the General Insurance and Health and Protection Insurance due to the special sanitary context and the response to it by the government. This has modified the exposition to the insured risks: low road accident rates, higher unemployment rates, companies’ insolvency, more deaths…

As a result, all Business As Usual annual works have been impacted: GAAP and Solvency 2 financial closures, Reserving, Clients account, Pricing, and Underwriting strategies.

Taking Health and Protection policies, the risk has been hugely impacted in accordance with the deductible. New adequate management must be set up because of the impact of the Covid-19, which increases the level of losses.
In a nutshell, the following was observed:

  • an extra mortality especially for people over than 65 years old; this is around 10% additional losses for death policies.
  • a reduction of premium amounts due to deaths, unemployment, companies insolvency, higher work leave and low financial rate context. This is tricky for the 2020 and the 2021 budget.
  • Irregularities in claims patterns.

As for General insurance, some positive effects have been identified on car and gadget insurance with low claims numbers mitigated by some negative effects of business interruption and companies insolvency.

All these effects put insurers in a challenging position for this year. They need to carefully evaluate/calibrate the impact of Covid-19 on their reserves and premiums for 2020 and beyond.

2020 is a tricky year for all life domains due to the Covid-19. Its impacts on all insurers’ annual closure works are a challenge to rise to. Don’t hesitate to contact us for temporary support.