COVID-19 crisis introducing a range of new complexities for insurers: Swiss Re

Global reinsurer Swiss Re believes that the ongoing coronavirus (COVID-19) crisis is introducing a range of "new complexities for insurers" in claims, underwriting and policy terms.

The reinsurer said that it has been actively monitoring the situation, including the spread and mortality rate of COVID-19, and trying to work with its clients to help understand and address them while applying its learning from experience in Asia to other markets.

"We are working closely with clients who want to better understand what this means for underwriting and claims," Swiss Re said in a statement.

The reinsurer, however, noted that one key element that remains uncertain is the assumption RO – which defines how many people an infected person will transmit the virus to in the susceptible population.

According to Swiss Re, the effective rate of reproduction will differ between countries and vary over time as governments implement a range of measures from social distancing to full lock downs of affected regions.

"The quicker governments react with interventions the more likely infection rates can be brought under control and the higher the likelihood that the mortality rate will be reduced," the reinsurer stated.

Additionally, it noted that the mortality impact on life insurance portfolios will be similarly difficult to assess. "Early estimates for the CFR vary widely by geography and age bands, with the additional difficulty of adjusting for deaths among those who are still infected at the time of observation, as well as the impact of under-reported symptomatic and asymptomatic cases."

The company plans to offer a dedicated COVID-19 underwriting guidance in its Life Guide shortly, including support for current and past infection as well as guidelines for possible exposures.

The reinsurer is also working with clients on other ways to help manage risk including dedicated questions around COVID-19 and some temporary changes to existing practices which might leave insurers exposed to anti-selection.

"But most of all, should a policyholder be diagnosed with a condition which meets the policy terms and conditions we will pay the benefit," Swiss Re said. "This is why insurance was invented. It's why our industry exists, and we stand ready to pay valid claims when our clients and policyholders need it most."