Covid-19 is expected to cause much more insurance losses than world-renowned catastrophes such as 2005 hurricanes, 9/11 bombing, 2011 Tohoku Earthquakes and Tsunami. As of the commencement of 2020’s last quarter, the insurance firms paid relatively modest compensations; they still prepare substantial reserves for the expected claims.
A representative from Allianz Global Corporate & Specialty commented that traditional property and liability claims have been lower than usual during quarantine; however, this was entirely reversed by the massive surge in Covid-19 claims. Allianz also mentioned that they have already received thousands of pandemic related claims, most of which will not be satisfied due to it being outside of the scope of policy, though they still require processing. The considerable portion of those claims were from entertainment industry. Being battered by the pandemic made them cancel and postpone major events like Tokyo Summer Olympics and freeze their productions, which resulted in millions of lost income.
Despite the rejections, the insured policyholders do not give up and continue to battle their insurers, already in the courtrooms. Having no cumulative definitive answer, most cases are ruled in the favor of insurers, leaving the pandemic caused losses outside of business interruption risk. North Carolina Department of Insurance Commissioner Mike Causey observes that most insurance firms will go bankrupt if the government forces them to pay BI claims. His German colleagues, nonetheless, do not agree with him and encourage (not legally binding) insurers to cover certain amount of losses the businesses bear.
While each day the speculations on coronavirus increases, the true impact of it is not yet possible to properly evaluate.