The COVID-19 pandemic has created a new suite of earnings pressures following significant summer natural catastrophe losses, but Australian and New Zealand-based insurers have been resilient, S&P Global Ratings says in a report.

Outbreak impacts will include a slowdown in premium growth, elevated claims in some lines and declines in the value of investments, but strong capital buffers, reinsurance and relatively conservative portfolios will protect credit quality.

Financial assistance measures that many insurers are offering, such as premium deferrals, full or partial refunds and rebates will also lower earnings for the current financial year.

“These financial assistance measures may improve consumer sentiment and retentions over the medium term,” S&P says. “However, ongoing affordability pressures may eventually result in higher lapse rates and potential underinsurance.”

S&P says the life and mortgage insurance will be most affected, with a higher unemployment rate likely to deliver higher mortgage claims over the next one to two years.

Other areas where increased claims are expected are travel, business interruption, landlords, trade credit, workers’ compensation, income protection and total and permanent disability.

But S&P notes that the large motor and home insurance portfolios of Australian and New Zealand insurers will likely benefit from the economic lockdown.