GC Capital Ideas takes a look back at the top stories of 2020.
1. January 1, 2020 Reinsurance Renewals Reflect Asymmetrical Market: Reinsurance renewals at January 1, 2020, were shaped by deteriorating loss experience, a lack of new capital inflows and increasingly challenged environments in the primary insurance and retrocession markets, according to Guy Carpenter.
2. Mid-Year 2020 Reinsurance Renewal – Guy Carpenter U.S. Property Catastrophe Rate-On-Line (ROL) Index: The U.S. property catastrophe Rate on Line (ROL) index for January through July renewals was up 12 percent year-on-year, and pricing pressures have built through the course of the year.
3. Insurance-Linked Securities Market Outlook: The catastrophe bond market demonstrated critical resiliency during 2019 and delivered ample capacity at a time when it was most needed, according to Shiv Kumar, CEO of MMC Securities.
4. June 1, 2020 Reinsurance Renewal – COVID-19 Looks Set to Rank Among the Sector’s Most Expensive Events: Although considerable uncertainty remains over its ultimate cost, COVID-19 looks set to rank among the (re)insurance sector’s most expensive events. The pandemic has the potential to bring unknown loss impacts. It is also likely to be one of the slowest developing catastrophes that carriers have ever encountered, likely creating a prolonged period of uncertainty.
5. Global Risks Report 2020 – Macroeconomic Risk Factors: During the last decade, moderate but stable growth has given way to what the International Monetary Fund (IMF) has called a “synchronized slowdown” — weakened growth among the world’s economies. Last year’s Global Risks Report, produced by the World Economic Forum (WEF) in partnership with Marsh & McLennan and Zurich Insurance Group, cautioned that a gradual deceleration was underway, and the evidence suggests that, since then, the slowdown of the world economy has further materialized.
6. Estimating the Impact of COVID-19 on the U.S. Medical (Re)Insurance Market: As the COVID-19 situation is changing on a daily basis, the impact to the insurance and reinsurance markets is not yet fully known. However, given the significance of the developments, Guy Carpenter provides our view of how COVID-19 may impact the medical (re)insurance market.
7. Chart – Top 10 Largest Insured Losses vs Projections for COVID-19: The chart in the link below shows how industry loss estimates for COVID-19 put forward by a number of entities compare to other major insured events, in inflation-adjusted terms.
8. COVID-19 Perspectives Series – Q&A with David Priebe, Chairman, Guy Carpenter: David Priebe offers COVID-19 insights on investment portfolio impact on (re)insurance pricing, pricing momentum amid economic challenges, alternative capital and communicable disease exposures and exclusions in a recent interview with The Insurer.
9. Clarity Over Coverage is Critical as COVID-19 Casts a Shadow over January Renewals: Reinsurance renewal negotiations are delicately poised, with increasing pressure on rates, economic uncertainty and disputes over COVID-19 wordings putting long-standing relationships to the test, according to a recent article in Insurance Day from Massimo Reina, CEO for Continental Europe at Guy Carpenter.
10. Standard & Poor’s Outlook on COVID-19: Standard & Poor’s (S&P) recently changed its outlook for the global reinsurance sector to negative from stable, as it anticipates a number of negative rating actions and increasingly difficult business conditions for the sector over the next 12 months, according to an article from Guy Carpenter. S&P assigned a stable outlook to over 80 percent of global reinsurers and projects that reinsurers will not meet their cost of capital in 2020 for a third year in a row due to COVID-19 insured losses and lower investment returns.