In times of economic distress, (re)insurance is typically considered by investors to be a defensive sector. This is not to say the sector will be unaffected by the COVID-19 crisis. Access to capital has reduced while carriers’ assets have clearly been hit by lower interest rates, wider credit spreads and an equity crash. A fall back into recession will also hinder growth opportunities, given the long-standing correlation between economic output and premium growth.
Amid the tragic human and economic impact of COVID-19, the pandemic could potentially affect financial institutions’ operations and insurance provisions in many ways, according to Marsh FINPRO colleagues Ariel Berman, Head of Financial Institutions, and Claire Garrett, Head of Retail, Financial Institutions. Marsh is an affiliate of Guy Carpenter.
COVID-19 continues to spread globally, presenting unprecedented risks to people, businesses and economies. Financial institutions need to address different challenges, from maintaining employee safety, facilitating business continuity and ensuring the principles of treating customers fairly remain embedded in the business, to maintaining the financial infrastructure.
The following article considers the pandemic’s initial potential impact on financial institutions and their insurance, specifically:
- Directors & Officers Liability Insurance
- Professional Indemnity and Civil Liability
- Employment Practices Liability Insurance
- Cyber and Crime
Guy Carpenter is actively following developments related to COVID-19 and its impacts across financial markets and the (re)insurance industry.