COVID-19 Loss of $44 Billion Is Third-Largest Catastrophe Cost to Insurers

According to insurance broker Howden, COVID-19's insured losses of $44 billion so far represent the third highest cost to insurers of any catastrophe, trailing only Hurricane Katrina and the 9/11 attacks.

Source: Reuters | Published on January 5, 2022

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However, Howden said in a report on reinsurance renewals that initial projections of $100 billion or more for COVID-19 insured losses now appear "improbable."

That prediction was made by industry experts nearly two years ago, when events were cancelled and businesses were forced to close around the world due to the pandemic.

COVID-19 has since been removed from many insurance policies.

"There's only so much event cancellation coverage out there, and there's only so much civil action coverage out there, and when you get to $40 billion, that's pretty much exhausted what was underwritten," Howden's head of analytics David Flandro said.

Property catastrophe reinsurance rates increased 9 percent year on year on Jan. 1, marking the largest annual increase since 2009, according to Howden's report.

Reinsurers insure insurers, and increases in reinsurance rates are typically passed on to insurer customers.

Global property catastrophe reinsurance rates rose 10.8 percent on average this year, according to a separate report released this week by reinsurance broker Guy Carpenter.

Gallagher Re reported earlier on Tuesday that some European property reinsurance rates increased by more than 50% after the region experienced record insured losses from natural disasters such as floods and storms last year.

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