OECD Says COVID-19 May Dampen Insurer Premium, Investment Growth

The COVID-19 pandemic could curb insurers' premium and investment growth in 2020, according to a report from the Organization for Economic Cooperation and Development (OECD).

The pandemic will have various impacts on insurance companies, including changing demand for policies and changes in insurers' claims experience, as well as an impact on the assets insurers hold to meet policyholders' claims, the OECD noted.

The OECD said preliminary data showed that gross written premiums increased in most areas of the world in 2019, particularly in the non-life sector. In 2019, gross premiums grew in real terms in 24 of 41 countries reporting in both the life and non-life sectors, the group said.

In the non-life sector, insurers in Luxembourg experienced the fastest premium growth rate in 2019 with a 173.4 percent increase, while insurers in the United Kingdom recorded the largest decline at –23.6 percent.

Premium growth in the first quarter of 2020 varied from country to country, the OECD said, with US property-casualty insurers seeing a 4.5 percent increase in premiums compared with the same period in 2019.

But, from the second quarter of this year onward, government shutdowns and stay-at-home orders to mitigate the spread of the COVID-19 pandemic, as well as industry initiatives such as partial refunds or premium rebates due to reduced activity as a result of shutdowns, may influence premium trends, according to the OECD.

The OECD noted that the COVID-19 pandemic also has had an impact on financial markets that is likely to have an effect on insurers' investment performance in 2020.