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#insurance carriers, particularly @Chubb & @Travelers are reporting that economic conditions in the USA have significantly deteriorated as a result of #covid19. The quarterly filings are pretty sober. Covid's effects are hard to predict. Here's what carriers are saying:
Decreased economic activity combined with premium refund programs negatively affected premium volumes. This is likely to persist through 2020 and into at least Q1 2021. Lower premiums = worsening underwriting expense ratio. If this lasts then expect layoffs.
Retention levels remain strong across the large & medium size carriers. However, this is one of the most uncertain variables in the future. As #covid19 surges , business will slow. Whether insureds continue renewing in the face of higher rates & worsening sales is a question.
P&C markets are expected to remain competitive through the balance of 2020. New business is expected to slow. Ironically, this may improve carriers' combined ratios as new business drives claims. Renewals are where the money is made. If renewals hold, carriers will be fine.
Some carriers are concerned about inflation in the USA due to Washington's various stimulus programs. Personally, I think this is overblown. Stimulus checks are not being saved - they're spent on rent & groceries. That ends up as a wash & there's been no material inflation.
Biggest risk right now? #covid19. Beyond that? Hurricanes, wildfires, and tornados are tearing up the #reinsurance markets. If we continue to see these #natcats the reinsurance sector is going to harden even more. admitted carriers bend the knee to the reinsurance master of coin.
The worst thing the state governments could do right now is start mandating insurers to cover #businessinterruption claims retroactively. Some states are considering this and its a clear and present danger to the American insurance industry. There isn't enough money to go around.
Also, cyber threats have risen from a real risk to an existential risk for the American economy. The majority of the white collar class works from home. Widespread system outages would end carrier operations and likely stop the operations of the insureds.
It's not all #doom and #gloom. That said, this #hardmarket is here to last for a while. Hard markets create a lot of opportunities. So, let's not whine too much just yet. Regardless, the challenges facing us in 2020 are likely to stay for 2021.
