Since March, market sentiment towards listed insurers has hinged on two themes: the sector’s ability to pay dividends, and the claims fallout from the Covid-19 pandemic. While the former was settled relatively quickly, following broad acquiescence to regulatory warnings around capital levels, the latter has proved harder to determine.
At first, as lockdown measures swept across Europe and North America, analysts sounded concerns that business claims for interruption, general liability and event cancellation insurance could have a “material impact” on generalists, including Beazley (BEZ), Hiscox (HSX) and Lancashire (LRE). Those concerns appeared well founded after several high-profile class action suits were filed against the trio, most notably the 600 policyholders suing Hiscox for the non-payment of business interruption insurance.
At the same time, each insurer has put out its best guess of the claims impact. Beazley expects $170m (£135m) in total claims, while Lancashire has narrowed its provisional loss estimate to $35m, despite noting the “exceptionally” difficult forecasting environment. Hiscox believes claims from travel and event cancellation could hit $175m, but has flagged unquantified exposures in its third-party liability book, as well as its London and reinsurance divisions.