Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Law360, London (July 16, 2020, 2:51 PM BST) -- Businesses around the world that provide insurance cover for events and travel interruptions could be hit with claims of up to €80 billion ($91 billion) over the COVID-19 pandemic, according to research from ratings agency Moody's.
The virus has damaged economies globally and ushered in measures such as government-enforced restrictions of movement. Many businesses have also been forced to close and high-profile events have been canceled.
The outbreak could create an additional €50 billion to €80 billion of claims worldwide for property and casualty insurers — "equivalent to a mid-sized natural catastrophe event," the Moody's research published on Wednesday said.
The claims could mainly be against event cancellations and travel insurance policies, according to Moody's Investment Services. They could also include claims against business interruption caused by the pandemic.
Property and casualty insurance, known as P&C, covers claims such as damage to property, liability, travel and events cancellation. London-based Howden Insurance Brokers, which has published information on COVID-19 and the P&C insurance sector, also estimates costs could reach tens of billions.
"Current estimates, from various sources, of the cost to the worldwide P&C insurance industry range between $80 billion and $100 billion," Howden said. The broker said that claims resulting from the pandemic would include canceled events, travel and in some cases business interruption. It also included policies that cover general liability.
Moody's also found that, overall, the European insurance sector is "resilient" and will be able to absorb the impact of COVID-19.
"The coronavirus outbreak has had an adverse, but manageable, impact on the European insurance sector, leading to a drop in company earnings rather than capital erosion," the ratings agency said.
But it was not all bad news for insurers: lower vehicle use during Europe's economic lockdown could mean a sharp drop in motor insurance claims, Moody's added.
There have been predictions about the size of the tab that insurance companies will have to pick up over the pandemic.
UBS said in April that the insurance industry could face global losses of up to $60 billion. The Swiss bank had initially projected a loss of between $20 billion and $40 billion, but revised that to between $30 billion and $60 billion, because of growing uncertainty over the scale of business interruption exposures.
And, in May, Lloyd's of London said its members will pay out up to $4.3 billion in claims resulting from COVID-19.
The estimate is lower than its $4.7 billion in payouts from the 9/11 terror attacks and the $4.8 billion total of claims from hurricanes Harvey, Irma and Maria in 2017.
--Additional reporting by Martin Croucher. Editing by Ed Harris.
For a reprint of this article, please contact firstname.lastname@example.org.