Covid-19, insurers back to worrying times

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Aside from inevitable cyclones, hurricanes and other storms, devastating forest fires have destroyed more than two million hectares in California. This toll is notably higher than that of 2018, and deemed to be the worst ever and twenty fold higher than that of 2019.

Another troubling issue for the insurance sector is the aviation business that is facing some serious challenges. The 737 MAX Boeing case, whose losses are likely to exceed 20 billion USD, which has brought out the misfires of the aeronautic industry, with the recent failures of another Boeing model, the 787 Dreamliner, worsening the situation.

While insurers are struggling in a very difficult environment, a new blow has struck the market, with the Covid-19 breakout triggering general chaos and abrupt shutdown of any activity at the global level. The issue at hand is no longer to mitigate the crisis since insurers are caught up in the turmoil.

As for the unexpected consequences of the pandemic, the insured are now filing lawsuits against most renowned insurance companies for defaulting on their commitments. AXA, Allianz, Lloyd and many other groups found themselves trapped by insurance policies containing ill-defined risks, badly drafted exclusions and vague clauses.

Not only did Covid-19 cause global recession, but it also made insurers aware of their own shortcomings, a blessing in disguise.

Atlas Magazine N°174, October 2020 [1]