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2020 could be most expensive loss year

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COVID-19 is shaping up to rank among the reinsurance sector’s most expensive events, and this year could bring record annual losses in the sector if other events compound large claims from the pandemic, Guy Carpenter says.

Insured losses for fiscal 2020 already look set to approach a minimum of $US100 billion ($146 billion) for only the fourth time ever, it says.

“Should claims from COVID-19 settle at the higher end of current market estimates – or losses aggregate elsewhere from the ongoing unrest in the US or an active wind season – 2020 could go down as the most expensive loss year ever,” Guy Carpenter says.

The year 2017 currently holds the record for insured losses at more than $US150 billion ($218 billion), and insured losses in 2011 and 2005 weren’t far behind.

The pandemic is likely to be one of the slowest developing catastrophes that carriers have ever encountered, the report says, creating a prolonged period of uncertainty and testing the limits of some carriers’ capital resilience.

Guy Carpenter say the fundamentals of reinsurance remain strong, with the sector’s capital base proving resilient to recent financial market volatility.

“There are still opportunities in this environment for (strongly capitalised) carriers to offer new solutions and grow selectively into challenged lines.”

It also notes personal and commercial motor lines have benefitted from an immediate dip in claims frequency due to lockdowns.