The past seven days have been arguably the most eventful yet in terms of Covid-19’s impact on the global insurance industry.
Regulatory pressure in Europe led to a flurry of cancelled dividends – principally in the UK. The approach, however, was inconsistent depending on the interpretation of the local regulator. Late on Friday, for example, ended with Generali confirming it will pay its dividend.
Thomas Buberl, the group CEO of Europe’s largest insurer Axa, encapsulated the frustrations of investors when he questioned the inconsistency.
“It is a relatively difficult to accept that we live in a common Europe,” complained Buberl to the Financial Times.
“We have the same capital standards and yet there are very different applications across the different regulators.”
As you would gather from his response, French regulatory authority ACPR is adopting the same cautious stance as the UK’s Bank of England.
Across the Atlantic, and the US appears the most advanced in debating a long-term solution with a draft PRIA bill in Congress that provides for an aggregate event deductible of $250mn and an aggregate annual cap of $500bn.
US auto insurers also upped a gear last week – the ten largest carriers all unveiled different premium credit schemes in response to the impact the lock-down is having on traffic use.
On a negative side, pressure on the industry over its reliance on pandemic exclusions continued last week with more negative headlines in many countries’ newspapers.
Looking ahead, the economic impact of the lock-down will be a significant theme this week as countries debate how and when to ease the quarantining.
This is a big theme in this week’s roundtable. At the same time, we also explore the role of alternative capital. It’s an interesting dilemma. As Guy Carpenter’s David Priebe points out, the ILS secondary market performed extremely well in Q1. However, we are also likely to now enter a fallow period for new ILS issuance because of the market turmoil.
As the year proceeds, will the sector respond with fresh investor demand underpinned by its non-correlating strengths and can it tackle its Achilles’ heel – tail risk? With exclusion wordings in such focus, our panel of leaders also explore this week the dilemma of toughening exclusion wordings at renewal. How concerned should the industry be to the potential threat the Plaintiff Bar will exploit such moves as an admission of cover.
It makes for fascinating reading…
The latest in our virtual roundtable series will be published every week. Feel free to share widely!
This edition’s participants:
Luca Albertini, CEO, Leadenhall Capital Partners
Andrew Horton, CEO, Beazley
David Matcham, CEO, IUA
David Priebe, Chairman, Guy Carpenter
Thomas Sepp, CUO Corporate Lines, Allianz Global Corporate & Specialty