COVID-19 impact to property and casualty insurance has been saved
COVID-19 impact to property and casualty insurance
Actuarial perspective on 2020 loss reserves and future pricing
COVID-19 is impacting property and casualty (P&C) insurance companies and is expected to continue to affect claims and premium trends over the next several months—and potentially for years to come. We explore the potential disruption across several lines of business.
- Preparing for future pricing
- Impact of COVID-19 on P&C policies
- The impact on actuarial teams
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Informing 2020 loss reserves and preparing for future pricing
As the debate continues on how to manage coverage exclusions related to viruses like COVID-19, the pandemic will likely disrupt investments, finance and capital, underwriting, claims, and actuarial functions due to catalytic events ranging from the closure of nonessential businesses to changes in state and federal regulations.
We review several lines of business and the potential disruption to claims and premium trends due to COVID-19. The situation is fluid and this article is based on information known as of the publication date. As the world continues to combat COVID-19, the impacts to P&C insurance policies will likely continue to evolve.
Impact of COVID-19 on P&C policies
The impact on actuarial teams
The economic and societal shifts experienced during the pandemic means the COVID-19 impact to the P&C insurance industry will likely continue moving forward, whether it is through government-backed pandemic insurance, rebates, disruptions to exposure and cost trends, or new interpretations of coverage language.
In the near future, if not already, actuarial teams will likely be asked to lead efforts in quantifying the financial impact of COVID-19 P&C insurance companies and their clients. Actuaries should consider both the microeconomic and macroeconomic effects of COVID-19 when pricing and reserving, and anticipate the need to reorganize segmentations, utilize techniques that account for changing frequency/severity trends, and closure patterns. Actuaries should also think critically about the implications of COVID-19 on new and renewal business.
If you have any questions regarding this article or if you would like us to help you better understand the impacts to your organization, please reach out to the team below.