A confluence of headwinds associated with COVID-19, such as a deep global recession, even lower interest rates and higher costs of capital, have added to the challenges faced by (re)insurers.
The pandemic is likely to be one of the slowest-developing catastrophes that the sector has ever encountered: claims will manifest themselves differently compared to more conventional natural catastrophe events and potential surprises remain a (long-term) concern.
Recent analysis from Guy Carpenter-affiliate Oliver Wyman shows that the fourth quarter of 2021 is likely the earliest we can get close to “back to normal” in the United States. Given this timing, companies must consider if what has been working for the past seven months can be sustained for the next 12 to 15 months and what they may need to adjust, according to Ugur Koyluoglu, Partner and Vice Chairman, Financial Services Americas, Helen Leis, Partner, Health and Life Sciences, Bruce Hamory, MD, Chief Medical Officer and Partner, Health and Life Sciences and Terry Stone, Managing Partner, Health and Life Sciences.
The key to “getting back to normal” is cumulative immunity, which has several dimensions that need to be considered: the percentage of the population that has already been infected and has protective immunity, and the percentage of the population that is either naturally immune to infection or has been effectively vaccinated. We need enough cumulative immunity present in the population to stop the virus from spreading.
The Long Haul to Normalcy provides four possible scenarios on when the appropriate threshold immunity can be achieved and shares the key levers that impact timing and the likelihood of success – both hindrances and accelerants. The research also offers business leaders three “no regret” moves to aid their planning and response efforts.