The COVID-19 pandemic and social unrest in 2020 remind us that the insurance industry’s challenges might change on a year-to-year basis, but they will never end. COVID-19 may represent the vanguard of a series of public health crises arising out of climate change, income inequity, fraying social safety nets, demographic imbalances, resource shortages and increasingly stressed urban infrastructures.
There is an old adage that “adversity builds character.” However, before adversity builds character, it reveals character, and the numerous catastrophes that have occurred over the last several years combined with the ongoing pandemic have clearly revealed the character of the insurance industry, according to John Trace, CEO, North America, Guy Carpenter, and Jay Dhru, Global Head of Business Intelligence, Guy Carpenter.
The (re)insurance sector is well-versed at navigating market-changing events, and while the impact of previous shock events such as Hurricane Andrew, the terrorist attacks of September 11, 2001, and Hurricane Katrina may have resulted in a loss of capital and reduced capacity in the short-term, the market responded to each occasion by innovating, working with governments and attracting more capital in the long term. Since 2017, catastrophe claims in the United States alone have totaled USD 214 billion. Despite that, the capital supporting the reinsurance sector has risen to a near all-time high of USD 471 billion.