Abstract
The purpose of the paper is to present the changes occurred on global insurance markets during the current pandemic situation. The effects are largely felt through asset risks, weaker premium growth prospects, and also insurers’ long-term investment. Developed markets, particularly life ones, are likely to shrink in real terms as a result of the economic slowdown. Higher mortality rates due to the coronavirus pandemic are affecting the bottom lines of many life insurers. The main trends in this sector in last years, is based on the most important aspects such as, written premiums, and benefits paid, types of the life insurance contracts and density and penetration degree of the life insurance sector.
Highlights
The insurance industry is generally well prepared for major loss events, including pandemics, but the financial impact will take time to assess and will be insurer and reinsurer specific
COVID-19 has threatened people's health and affected people's lives and livelihoods as governments tried to limit the spread of the virus through preventative measures, such as quarantine and business closures
It is a legal requirement for customers to take out insurance during physical meetings to allow for face-to-face identification, which limits the possibility of selling new contracts during COVID-19
Summary
The insurance industry is generally well prepared for major loss events, including pandemics, but the financial impact will take time to assess and will be insurer and reinsurer specific. Covid-19 crisis mainly affected solvency and profitability of the insurance sector. An immediate implication of the pandemic for life insurance companies was the tragic human tribute affecting life insurance and annuity coverage. Life insurance companies have significant assets to cover their liabilities, changes in the financial markets can have various implications. The net effect on the balance sheets will depend on the duration of the asset compared to the duration of the liability. The net effect of a long-term reduction in interest rates on balance sheets is likely to be negative. Some companies have made additional efforts to help protect customers from fraud, especially online fraud which has grown during the crisis. Each insurance company is different in size and risk profile and is affected differently by COVID-19. This means prudent management of its capital, especially in times of economic turmoil, so as not to jeopardize its ability to deliver on contractual promises to its customers and in the future
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