Insurers' and Reinsurers' Premiums Grew in 2020, Despite Challenges

Despite the impact of the COVID-19 pandemic, global insurers and reinsurers achieved premium growth in 2020 due to rate increases for reinsurance and commercial insurance lines, with US premiums outpacing gross domestic product growth, according to Willis Re.

In the US market, most lines of business reversed second-quarter premium declines, according to the Willis Re report, titled Global (Re)insurance: Pricing Improves but COVID-19 and US Casualty Concerns Weigh. All-lines direct written premium ended the fourth quarter with modest 1 percent growth over the fourth quarter of 2019, the report said, with most commercial lines—excluding workers compensation—achieving rate increases.

Rate increases in other liability and product liability lines were significant and accelerated through 2020, Willis Re said, with commercial auto seeing its tenth straight year of rate increases. That increase was offset by COVID-19-related rebates and discounts, however, the report said. COVID-19 premium rebates, coupled with rate decreases driven by improved performance and pricing competition between insurers, caused a decrease in private auto premiums.

European insurers and reinsurers achieved premium growth in 2020 due to improved pricing for reinsurance and commercial insurance, according to Willis Re. The rate of growth decreased in the second and third quarters, in part due to COVID-19-related impacts on premium levels for certain lines of personal insurance such as travel and assistance. In addition, the economic slowdown caused reduced premium levels for credit and surety business.

Willis Re said the global insurers and reinsurers it tracks booked approximately $26 billion of COVID-19-related losses in 2020. "There is still a significant degree of uncertainty around ultimate losses—seen in both the high proportion of loss bookings that are [incurred but not reported] and the wide gap between the bottom-up $26 billion and the $66 billion mid-point of top-down loss estimates for the global non-life industry," the report said.

Overall, despite the challenges of 2020, capitalization of global (re)insurers remained strong as the year ended, Willis Re said.