Latest Studies

Triple-I economic snapshot: Quarterly P/C industry snapshot
Dr. Steven Weisbart
Triple-I special report; 16 pages
April 29, 2020

This report discusses the economic forces affecting property/casualty (P/C) insurance. The report begins with an analysis of six of the economic indicators that impact the P/C casualty industry and compares 2019 performance to 2020 projections. P/C premium growth usually follows nominal GDP, and in an analysis of 53 Blue Chip forecasts, there is a remarkable range. Some foresee a two-quarter recession. The report notes that the growth of exposures through 2019 will end in the 2020 recession, but the latest economic data do not show that yet. The report also discusses private sector business starts and deaths; workers compensation; healthcare; and housing and vehicle sales. The report also includes as a special topic discussion on COVID-19 and business interruption insurance, which outlines four key takeaways: global pandemic risks are uninsurable; retroactive payouts would bankrupt insurers; insurers are ready and actively paying covered claims; and that policies clearly explain “virus and bacteria exclusions.” Full report

Scenario Analysis of the COVID-19 Pandemic
Richard Clarkson, Christopher Bozman and Will Shuter
Willis Towers Watson;
May 01, 2020

In this report Willis Towers Watson (WTW) warns that industry-wide insurance losses from the coronavirus pandemic will likely exceed losses from the 2001 World Trade Center attack and could reach $140 billion at the extreme tail-end of probabilities.  The new report from WTW includes many numerical estimates and ranges, explaining that there is still considerable uncertainty over just how large the market-wide impact from the pandemic will be.  The report provides estimates for the property/casualty industry loss, under a range of scenarios, and focuses on key lines of affected insurance business in the U.S. and UK general insurance market. The article notes that discussions are underway between industry and governments, on attempts to implement a backstop for future pandemic outbreaks. Full Report

PwC’s COVID-19 CFO Pulse Survey US findings
April 27, 2020

This report surveyed 305 CFOs and finance leaders from a diverse array of industries to better understand business perspectives as the U.S. heads into a period of further operational complexity, with companies maneuvering a safe return to the workplace following the coronavirus pandemic. The report emphasizes back-to-work playbooks that put employee health first, with companies setting up for a phased-in return to the workplace that will be inconsistent in the U.S. and internationally, with 49 percent of those surveyed saying remote work is here to stay for some roles. Other key findings from the report include how protecting people will be a high priority, with 77 percent of CFOs planning to change safety measures like testing and 50 percent expecting higher demand for enhanced sick leave; over half of all respondents (53 percent) projecting a decline of at least 10 percent in company revenue; about a third (32 percent) expecting layoffs to occur as CFOs continue to target costs and 70 percent considering deferring or canceling planned investment. Full Report

The great economic shutdown: A quarter of the cake gone
Olga Tschekassin
Swiss Re Institute;
April 21, 2020

Analysts at the Swiss Re Institute estimate that the shutdown orders of governments around the world are reducing the economic activity in the most advanced markets by 20 to 25 percent. The impact on a nation is unique and depends primarily on the composition of its various sectors. Emerging markets are more likely to be affected because of their relatively larger focus on consumer products. Other economies are expected to show more resilience because of large public services and manufacturing sectors. However, the current crisis differs from most economic downturns because the services sector, which is generally more stable, has been impacted more than manufacturing because the containment measures intended to slow the spread of the coronavirus have disproportionately affected services. However, online sales and telecommunications will likely bolster economic resilience. The extent of output loss will depend on the length and severity of the shutdown orders, which vary among nations. Full report

Implications of coronavirus for North American life and annuities writers
Ramnath Balasubramanian, Alexander D’Amico and Jonathan Godsall
McKinsey & Company;
April 01, 2020

 The coronavirus crisis is an extremely complex challenge to North American life and annuities companies, and the uncertainties about transmission rates during the coming months will require them to make unprecedented changes. In addition to making immediate adjustments to their operations, insurers must prepare for morbidity and mortality rates that could become volatile. The potential economic impact of the pandemic should prompt disability insurers to prepare for much higher losses. McKinsey & Company anticipates a decline in the total premiums collected by North American insurers because of three factors--the erosion of macroeconomic conditions that will reduce demand for high-premium, more complex life and annuities policies; a more conservative approach to pricing and underwriting; and the continuing prevalence of analog sales. Carriers are advised to focus on supporting intermediaries by making certain that advisers can handle all sales functions digitally, everything from targeting new prospects to issuing policies. The report discusses strategic product, pricing and management considerations related to the pandemic and recommends that carriers develop a strategy for the next 12 to 24 months, innovate their product portfolios, work on an approach to digitation referred to as channel migration, prioritize in-force management, pay close attention to costs, strengthen their assets, and upgrade talent. Full report

How the coronavirus could change US personal auto insurance
McKinsey & Company;
April 01, 2020

This article considers how the COVID-19 pandemic will affect auto insurers in the longer term. Fewer people are driving due to business closures and work-from-home practices. This could lead to fewer accidents and claims – but evidence suggests severity of the claims generated may worsen. Speeding has increased in several states – in some cases, leading to fatal accidents. In the longer term, the report suggests, the pandemic could precipitate structural changes in the market for car insurance: “Mobility trends may pause if more people choose to own a car and drive everywhere because they think ride sharing and public transportation are too risky…. Historically low oil prices will make driving much more affordable.” On the other hand, if car purchases decrease because of economic uncertainty and unemployment, insurance sales could decline, hurting revenues. The industry already has returned more than $10 billion to policyholders through premium relief during the crisis, which also could affect insurers’ bottom lines. The article lays out four scenarios to help insurers think about how the economic impact may play out in the longer term. Full text

Virus-death surge may mean $7.2 billion in life insurance claims
Lananh Nguyen
April 30, 2020

According to an Aite Group LLC study, U.S. life insurers may experience as high as $7.2 billion in claims if coronavirus deaths rise to the high end of projections of 150,000. The estimate includes costs for policyholders between the ages of 56 and 74, which are projected to reach as much as a combined $4.1 billion for individual and group plans. MetLife Inc., the largest U.S. life insurer, is “well prepared” for the crisis, according to Chief Executive Officer Michel Khalaf. The company increased capital as the pandemic spread. The Aite study also found that individual policies would account for 81 percent of claims, while group plans like those offered by employers would account for the rest. Coronavirus deaths in the U.S. reached nearly 60,000 on April 29, more than double from two weeks prior. Full Text

Presenting Characteristics, Comorbidities, and Outcomes Among 5700 Patients Hospitalized With COVID-19 in the New York City Area
Safiya Richardson et al.
April 22, 2020

This study aimed to describe the clinical characteristics and outcomes of patients with COVID-19 hospitalized in a U.S. healthcare system. The study included 5,700 with patients with a median age of 63 years old admitted to 12 hospitals in New York City, Long Island and Westchester County, New York within the Northwell Health system, with all sequentially hospitalized patients between March 1, 2020, and April 4, 2020. The most common comorbidities were hypertension (3026; 56.6 percent), obesity (1737; 41.7 percent) and diabetes (1808; 33.8 percent). During hospitalization, 373 patients (14.2 percent) were treated in the intensive care unit care, 320 (12.2 percent) received invasive mechanical ventilation, 81 (3.2 percent) were treated with kidney replacement therapy and 553 (21 percent) died. Mortality for those requiring mechanical ventilation was 88.1 percent. The median post discharge follow-up time was 4.4 days. A total of 45 patients (2.2 percent) were readmitted during the study period. Among the 3066 patients who remained hospitalized at the final study follow-up date, the median follow-up at time of censoring was 4.5 days. Full Study

Estimating the impact of COVID-19 in the US medical (re)insurance market
Guy Carpenter;
April 13, 2020

This report discusses the impact of the coronavirus pandemic on the medical insurance and reinsurance markets. The first exhibit is a timeline showing the major developments in the pandemic since the virus was identified in December 2019 through April 4, 2020. An analysis of potential medical claims from the pandemic is accompanied by a graph showing the average member retention of the following healthcare clients: employer stop loss; and fully insured through a combination of coverage, Medicaid and Medicare. The discussion of the types of carriers and reinsurance coverages that are most affected includes a table of hospitalization, intensive care unit admission, and case-fatality percentages for COVID-19 cases in seven age groups. The report also considers the potential for extra-contractual obligations and discusses the implications for reinsurance coverage and rates. Full report

Economic Impacts of Coronavirus on Workers Compensation
Leonard F. Herk
National Council on Compensation Insurance (NCCI);
April 17, 2020

The key takeaways from this NCCI economic briefing are: Coronavirus layoffs are happening with unprecedented rapidity but not uniformly across economic sectors and types of businesses; Temporary business shutdowns and permanent closures have different impacts, and small businesses are at particular risk of closing permanently; Coverage of coronavirus claims under workers compensation is an open question whose resolution is likely to differ across states; Reduced access to medical care during the pandemic may increase the duration of existing claims; Workers anticipating layoffs may defer or accelerate injury reporting, impacting claim frequency; Motor vehicle accidents are likely to decline due to reduced business travel and less congestion; and that during the pandemic, premium is likely to fall more than employment. Full report

Terrorism Risk Insurance
Government Accountability Office;
April 20, 2020

Two recent reports by the United States Government Accountability Office (GAO) address the federal terrorism risk insurance program (TRIA). Each reauthorization of TRIA, which was passed in the wake of the Sept. 11, 2001, terrorist attacks, through 2015 reduced the magnitude of the government’s exposure. The first report is on the federal fiscal exposure, both explicit and implicit, created by the program. GAO found that the changes to the law since its inception have reduced explicit federal exposure, shifting risk onto the insurers who are managing this risk. The GAO found that even as the government’s exposure decreased and insurers’ exposures increased, the market for terrorism risk remains stable. The report said insurers are uncertain how the government defines insured losses for the purposes of calculating whether the program's $200 million trigger or $100 billion cap have been reached. For example, some insurers interpreted insured losses to include the portion of losses policyholders retain, which was different from the government's interpretation. Differences in interpretations could lead to disputes between insurers and the government following a terrorist event. The second report on the state of terrorism risk insurance and the Treasury's program processes found that additional clarity surrounding Treasury's certification process would help ensure market stability. The reports can be accessed here and here.

Global Property & Casualty Insurance M&A in 2019:  Distribution Dominates
April 13, 2020

This study tracks and analyzes U.S. and non-U.S. property and casualty mergers and acquisitions activity for insurers, distributors, and service-related firms. In 2019, M&A activity involving acquisitions of property and casualty insurers slowed considerably from 2018, down approximately 6 percent. By contrast the distribution acquisition market sustained strong interest from consolidators as well as private equity investors throughout 2019. “Multiple factors dampened the M&A environment for property and casualty insurers in 2019,” said Jerry Theodorou, a Director, Insurance Research at Conning. “A firming pricing climate helped fuel premium expansion lessening the need for inorganic growth, concerns over reserve adequacy kept buyers from making acquisitions, and targets have become more expensive, especially the higher quality organizations.”  With the duration of the COVID-19 pandemic difficult to predict, insurance-related M&A will experience inactivity for some time. The report is available for purchase from Conning by calling (888) 707-1177 or by visiting