SOLVENCY II & BEYOND
IMPACT OF COVID-19 ON THE INSURANCE INDUSTRY The pandemic has had an undeniable effect on individuals, businesses, society and the wider economic environment. In this article, Mohammad Khan, Leader of General Insurance for PwC UK and Luke Kendall explore the extent to which the insurance industry has been impacted by COVID-19 and consider what the future may hold. YE20 Performance
favourable impacts observed across the different insurance sectors. Whilst general insurers have suffered significant losses across property and commercial lines - including significantly more business interruption losses that went to court - there has been a partial offset from motor and home insurance policies, with reduction in claim frequency due to lockdown regularly cited.
In the life insurance sector, the direct impact of such a sharp rise in mortality is partially offset by Whilst commentators have examined the impact a favourable effect on annuity business and any of the pandemic on the insurance industry during associated mortality reserve releases. However, the pandemic, the year-end reporting cycle the extent of any favourable impact is highly provides us with a good opportunity to take dependent on the underlying business mix of the stock and examine the varied impacts across the insurer. market. How did the insurance industry weather Unlike other industries, where financial the storm? performance has been significantly adversely affected, an observer of the recent public In our view, 2020 showed the insurance industry announcements by insurance companies might what the “art of the possible” was. have been surprised to note that, despite such an unprecedented year, the financial performance of Like many businesses, most of the insurance some companies has remained robust. What lies industry sent their staff home to work in March behind the numbers? What does the future hold? 2020. For many insurers this was a significant Why have some insurers been more impacted operational change. Initially insurers had to focus on providing laptops and on how to use than others? potentially limited bandwidth and online systems. The year-end reporting cycle has brought to light not only the adverse impacts on insurance Insurers (rightly) focussed on ensuring customers companies, but also some of the offsetting could call to make a claim, their claims could be processed and renewals could be placed to
