Rating firm AM Best has said that its stable outlook on the global reinsurance sector remains “dynamic” as the industry continues to struggle to fully understand its exposures to COVID-19.
Speaking on a webinar hosted by the firm, Alex Rafferty, Associate Director, Analytics at AM Best said at present the headwinds the market faced were being matched by the tailwinds, driven by increasing rates.
However, he said the COVID pandemic at present delivered positives and negatives.
While the market had been impacted the levels of claims at this point were lower than estimates but the changing nature of the pandemic, including the current second wave delivered a degree of uncertainty that was concerning the market and those that rate it.
“It is not to say that COVID has not impacted the market,” he said. “But at present the negatives and the positives look to be balancing each other out so we are in a position to maintain the stable outlook on the market.”
However, he added there was still a high degree of uncertainty over the finally tally of the pandemic on the global economy and the reinsurers and insurers which assume many of the risks.
While the life sector was seen to be the sector that would bear the brunt of the claims the non-life market was now under pressure particularly given some governmental and regulatory decisions around claims such as business interruption.
At present the non-life claims costs were fairly evenly split between the primary and reinsurance market.
“the first half of the year saw an estimated $25 billion in COVID related realised losses,” explained Mr Rafferty. “this was below the initial loss estimates.
“Some firms have been hit harder than others and tis is down to business mix considerations with event cancellation having seen a large number of claims.
“We are seeing rising expectation of the scale of future losses, and it is clear that the pandemic has challenged the industry’s assumptions for losses of this type with Governmental challenges to areas of cover impacting non-life performance to date.”
Mr Rafferty added: “While we have been able to maintain the stable outlook it is a dynamic stable and there are large number of factors that could influence the market in the months to come, which will include the market’s exposure to COVID claims and the impact on the global economy which will impact of the levels of business insurers, and with it reinsurers may see.”