The rapid spread of Covid-19 in the first half of 2020 resulted in drastic lockdowns, forcing the closure of businesses, cancellation of events and a general curtailment of economic activity around the globe. In April, 3.9 billion people, almost half the world's population, were largely confined to their homes.
Many markets experienced deep contractions during lockdowns - the UK economy shrank by almost a quarter while German exports shrank by 25%.
Estimates vary widely, but there have been reports that insurers could pay claims related to the coronavirus pandemic of around $80bn in the US and the UK alone, comparable to the insured loss bill from hurricanes Harvey, Irma and Maria in the 2017 Atlantic hurricane season. Lloyd's puts this figure at as high as USD 110 billion in 2020 (USD 203 billion when investment losses are factored in), on par with some of the biggest major claims years for the insurance industry.
"With the reduction in economic activity, traditional property and casualty claims have been subdued. However, this was outweighed by an increase in Covid-19 related claims notifications, especially in the entertainment industry with the cancellation of live events and the interruption of movie and other film productions. Meanwhile, there is still the potential for traditional property damage and business interruption claims to occur as factories and businesses restart, and given the longer development patterns of third-party claims," says Philipp CREMER, Global Head of Claims at AGCS.
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