RIMS Australasia 2020 Virtual Summit: DAY FOUR: 1. The global insurance market & COVID19: An event of historic proportions

Insurance premiums will rise through 2022 due to Covid-19, an event of historic proportions, according to Juan Luis Ortega, executive vice president at Chubb Group and president of Chubb Overseas General.

Speaking at the RIMS Australasia 2020 Virtual Summit, Ortega said Lloyd’s of London Covid losses could reach as much as $100 billion, at the upper end of estimates for the underwriting sector. 

Ortega said increased claims and reduced investment gains would prompt insurers to look at improving combined operating ratios, inevitably contributing to a hardening of the insurance market worldwide.

The insurance executive said industry returns were under pressure since 2018. Losses tended to grow at an annualised rate of 4.5%, “so for the insurance industry to be level…we should be pricing at a plus 4.5% rate on the total aggregate of global premiums, just to keep track with loss cost trends”.

According to Ortega, rates would need to rise for combined operating ratios to fall, a trend that would continue into 2022, “so expect more rate to come through in the next few years. You may be tired of hearing that story, but it is here, and it is here to stay”.

Ortega said the commercial property insurance market had experienced years of volatility, “and you need rate to cope with that”.

Ortega noted D&O trends in major markets were in line with events in Australasia. He said US premiums were likely to increase further amid a growing number of class action filings in America.

“For those of you that are buyers of this coverage, of which many of you are in the audience, it shows what you are going through in Australia; you’re not alone. It’s painful in the US, in the UK, in continental Europe, and in every part of the world.”