Amid pandemic, commercial insurance buyers face an extended hardening market plus new pressures on coverage terms and conditions
Willis Towers Watson report addresses COVID-19’s impact on the P&C insurance industry
ARLINGTON, Va., May 07, 2020 (GLOBE NEWSWIRE) -- North American commercial insurance buyers will continue facing upward pricing pressure across most lines of business compounded by a newfound
scrutiny of their coverage terms and conditions. These topline observations emanate from Willis Towers Watson’s (NASDAQ: WLTW) Insurance Marketplace Realities 2020 Spring Update. Notably, the report expects that the decline in economic activity will lead to large
reductions in insurable values, yet not a single line of business predicts overall rate decreases; however, in many lines, the ultimate impact of COVID-19 and the economic downturn remains to be
seen.
“The pandemic and economic downturn will very likely extend the hard market through 2021, with market discipline continuing as insurers’ losses materialize and their investment income deteriorates,” said Joe Peiser, global head of Broking, Willis Towers Watson. “While we expect pressure on coverage to last for the foreseeable future, mainly due to significant policy language disparities brought into focus by the inconsistent language addressing pandemics, the good news is the insurance industry is solvent, well capitalized and positioned to deliver.”
Favorably, according to the report, despite all the stress and pressure of the pandemic, business is being conducted with a strong degree of civility, underscored by considerations granted by underwriters, especially in extenuating circumstances of which there are plenty. “We are seeing accommodations. This spirit is something we hope will last,” noted Peiser.
Another positive development amid the crisis centers on the discussion of a public/private partnership to address the threats posed by future pandemics. This could potentially take the form of a federal backstop like the Terrorism Risk Insurance Act that followed 9/11 or the model of the National Flood Insurance Program, which is funded by the government and mostly administered by the private insurance industry.
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“Pandemic risk is different, and the exploration of solutions should be robust and involve all stakeholders, public and private. But let’s go one step further and include other systemic global challenges and priorities, such as climate change and cyber terrorism. We must learn from recent events and combine our collective experience to be better prepared for the next systemic global challenge,” said Peiser.