Total claims could exceed those of 9/11, underscoring the need for a government backstop - Willis Towers Watson
COVID-19 general insurance losses will be between $32 billion and $80 billion across key classes in US and UK, according to an impact study from Willis Towers Watson.
The broker has provided loss estimates for those general insurance classes it expects to be adversely affected by COVID-19. These include US and UK business interruption, contingency, US Directors & Officers, US employment practices, liability, US general liability, US mortgage, trade credit and surety and US workers compensation.
“Beyond its devastating human cost, the COVID-19 pandemic has swiftly upended economic activity around the world,” said Alice Underwood, global leader, Insurance Consulting and Technology, Willis Towers Watson. ”At this point, it appears that the industry-wide level of general insurance loss could exceed that resulting from the 2001 World Trade Centre event.”
”Given the potential scale and systemic nature of pandemic loss, discussions about the need for some sort of government backstop to address future pandemic risk have already begun.”
The UK insurance industry, for example, has already started discussions with Pool Re, the UK government backed terrorism reinsurance pooling arrangement to provide pandemic cover.
Similarly, the French government has set up a working group to investigate how insurance for black swan events can be provided in the future.
This highlights how governments are looking to the insurance industry to help provide both expertise in this difficult circumstance as well as future risk transfer mechanisms.