Insurers already embattled by high COVID-19 based payouts will come under further strain as 2020 progresses from economic recession, market volatility and natural catastrophe claims, says GlobalData.

This year’s hurricane and typhoon season is yet to arrive and unexpected losses associated with COVID-19 will place some providers under increasing financial strain.

The full impact will not be known until later in 2020 when the majority of natural catastrophes pass and the severity of the economic implications become clearer, the analytics firm says.

“The insurance industry is braced for a turbulent future,” analyst Daniel Pearce says. “The combination of natural catastrophes, volatility in financial markets and economic recession will put the insurance industry under considerable strain.”

He says insurers will be “considerably” impacted in less direct ways than claims, with a potential downturn in the demand for commercial insurance emerging as economies slide into recession and businesses are forced to close.

Investments have declined in value as financial markets globally have fallen to unprecedented levels. Combined with record-low interest rates, the pressure on insurers' balance sheets has increased dramatically.

The fallout on the insurance industry will depend on how long it takes to get the spread of the pandemic under control and how many businesses will be able to recover, Mr Pearce says.