Estimates of commercial insurance losses related to the COVID-19 pandemic vary widely, with Lloyd's estimate of global damages as high as $ 1
The pandemic has reduced the risk in some areas while increasing it in others. The paper points to "significant reductions [in claims] in certain lines of property and liability insurance, especially in the aviation sector."
Relying on technology and the transition to homework for staff and remote monitoring of industrial facilities make companies more vulnerable. to cyber attacks. Reduced air travel and increased emphasis on hygiene standards can benefit the risk profile for many industries, while changes in production line processes to facilitate social distancing can increase the error rate.
According to Allianz, the costs of business interruptions unrelated to COVID-19 fell in many cases because many manufacturers, their customers and their suppliers either shut down or reduced their operations. On the other hand, COVID-19 containment measures have in some cases led to longer disruptions and more expensive claims.
"For example, a fire at a chemical plant in South Korea forced the closure of the plant," reports Allianz. "Restricted access due to coronavirus locking extended the recovery period, increasing the total cost of downtime."
The dormant situation in some industries, such as aviation, does not mean that all loss exposures have disappeared equally, says Allianz. They have just changed and created new risk accumulations: “For example, large parts of the global fleet are grounded at airports, many of which may be exposed to hurricanes, tornadoes or hailstorms. The risk of switching or ground incidents, when large aircraft fleets are temporarily parked, also increases and can lead to costly receivables.
Resumption of business entails its own risks. Opening factories and restarting production lines are high-voltage situations that can involve machine malfunctions and fires.
Eye on supply chains
Allianz points to "the current reconsideration and de-escalation of global supply chains to achieve more operational resilience" as a trend to watch.
"Many companies review their supply chain strategies and evaluate options such as parallel supply chains with more redundancies or some reshoring from low-cost countries back to more developed markets," says Allianz. "This will have an important impact on insurers, both in terms of generating demand for new protection solutions as well as new indemnity scenarios."
There is also potential for claims to materialize from long tail lines, such as board members and executives. (D&O) or professional liability, as well as compensation to workers, if any negligence or failure to adequately protect against the coronavirus outbreak has been experienced.