Captive insurance companies are responding to the COVID-19 pandemic in ways traditional insurers frequently aren't, an experience that could lead to broader use of captives to address future crises. While most traditional market business interruption policies aren't responding to the losses, many captive insurance companies provide coverages that are.
The United States experienced a record 16 billion-dollar weather-related disasters through September, according to the National Atmospheric and Oceanic Administration. Eleven of the sixteen disasters were due to severe storms across more than thirty states. The remaining five included one wildfire, one drought, and three tropical cyclones.
Pandemic fears were clearly on the minds of business leaders surveyed for the World Economic Forum's newly released "Regional Risks for Doing Business 2020" report. The spread of infectious disease made the largest move up this year's ranking, finishing second globally behind unemployment or underemployment.
The COVID-19 pandemic will continue to have an impact on US property-casualty insurers' results in the second half of 2020, though pandemic-related losses will likely be outweighed by catastrophe losses, according to Fitch Ratings. Insurers' full-year combined ratio will likely move toward 100 percent from the 98 percent at midyear.
With the world still gripped by the COVID-19 pandemic, experts rank pandemic and infectious diseases as the number one risk confronting society in the next 5 to 10 years, according to AXA's 2020 "Future Risks Report." Climate change, the survey's top risk since 2015, slipped to second place this year.