With COVID-19 continuing to put a stranglehold on businesses and conferences across the globe, Beazley has estimated that its costs related to first-party business insurance claims have doubled since it last made its projections months ago.
The specialist insurer reported in a new trading update that it has pegged its total estimate for first-party claims at US$340 million net of reinsurance. By comparison, Beazley projected US$170 million net of reinsurance for first party business claims costs in April. Nearly the full increase has been caused by further event cancellation losses.
In its initial projection, Beazley had assumed that business events would resume in September this year, leading to a normalisation in the level of contingency claims. But COVID-19’s evolving status continues to push that hope further away; Beazley’s new estimate assumes normalcy will return by the second half of 2021.
If normalisation does not take place by H2 2021, Beazley anticipates another US$50 million of further first-party claims net of reinsurance.
Beazley also reported that since its book of business is heavily weighted to the US and UK (the largest segment dedicated to conferences) many of the company’s clients are still unable to operate thanks to ongoing restrictions on holding events.
“Conferences that were postponed earlier in the year are now being cancelled, as are ones due to take place in the final quarter of this year which means our loss estimates have increased,” Beazley’s report said. “In addition, we anticipate further claims based on our exposure for events in 2021.”
Although Beazley is anticipating a huge hit in terms of first-party business claims, the company reported improving growth prospects across its portfolios of business – primarily driven by continuing rate improvements. Late August saw an overall rate change of 13%, the firm noted.
Beazley remains hopeful that the estimated overall rate growth for 2020 will be in the mid-teens, and that 2021 will similarly see double digit growth.