Navigating the Impact of COVID-19 on Property and Casualty Insurance

Accounting Rules

The National Association of Insurance Commissioners (NAIC) Working Group has approved flexible COVID-19 accounting rules, allowing insurers to better manage their financial reporting during this unprecedented time. This move is crucial as it provides insurers with the necessary flexibility to adapt to the rapidly changing economic landscape brought about by the pandemic.

Business Interruption

The debate over business interruption insurance coverage during the COVID-19 pandemic has been intense. States are pushing to force insurance companies to pay out on these policies, while insurers argue that such claims are not covered under existing contracts. According to Willis Re, the availability of reinsurance capital is a key factor in determining the industry's ability to absorb these losses, with estimates suggesting that COVID-19 could result in industry losses ranging from $40 billion to $80 billion.

Profits & Losses

The financial impact of COVID-19 on the insurance industry is significant. Companies like Travelers and Chubb have reported substantial losses, with Chubb's CEO calling the pandemic the largest event in insurance history. The classification of COVID-19 as a catastrophe event by Chubb highlights the severity of the situation, and while claims are manageable, reinsurers face formidable challenges in the coming months.