We up our COVID-19 insured loss estimates from ~$20-40bn to ~$30-60bn
The industry narrative on potential COVID-19 claims has deteriorated sharply in the last two weeks. The trade press suggests COVID-19 could be the most costly insured loss on record, ~$90bn). We believe it is rising concern around international (non-US) business interruption ("BI") driving this caution. We deep dive on BI and also credit & surety in this report, the two main drivers of expected losses. Whilst we sense a $90bn insured loss still looks high, uncertainty prevails.
Business interruption and trade credit likely to drive material market losses
Business interruption remains the key uncertainty. Reports indicate losses are mounting on non-US BI where coverage for pandemic is included. We now expect $7-22bn of BI losses (previously: $5-15bn). The other key driver is credit & surety; we expect $8-16bn of losses. We see this as more of a reinsurance loss given low primary exposures.