Coronavirus will be the largest loss on record for insurers, Lloyd’s of London says.
Dan Levenson July 30, 2020
The coronavirus has had an enormous impact on virtually every industry, including the insurance sector. According to Lloyd’s of London, Covid-19 is expected to cause the largest loss to the insurance industry on record.
Lloyd’s estimates that its own COVID-19 related claims will top $4 billion by late June and it is feared this number will rise further if the pandemic continues for an additional quarter. When it comes to the non-life insurance industry, Lloyd’s estimates over $100 billion in underwriting losses occurring over the course of 2020.
Lloyd’s also expects investment portfolios to decline to the tune of around $96 billion throughout the industry, radically affecting retirement, though true costs won’t be able to be fully assessed for years. Much like the 2008 financial crisis, this will have ramifications for quite a while on the national and global economy. This kind of uncertainty only adds to the already stressful situation of business navigation during this time of economic downturn.
Another report put out by American Health Insurance estimates losses between $56 billion over $500 billion.
While the range is enormous, the actual costs depend heavily on infection models. It is estimated that over 50 million Americans total could end up being infected, trickling down to around 1.3 million that not only develop symptoms but symptoms so severe that they require intensive care.
Intensive care may require a ventilator for a little over a week, which on top of standard hospitalization costs can total upwards of $30,000. This alone adds to around $39 billion in healthcare costs based on the initial estimates. Out-of-pocket costs are another story altogether.
Estimates of out-of-pocket costs to patients are staggering as well. Cost-sharing is estimated to grow by around 14-18% annually over the next few years totaling around $10-$78 billion across all the businesses modeled. However, one ray of light for consumers is that some insurance providers are temporarily waiving out-of-pocket costs for COVID-19 related testing and treatment.
COVID-19 is a situation that is shifting the way the world operates and resulting in industry altering costs on the world of insurance. These costs are not just hitting in the form of exceptional payouts but also in terms of damage to investment portfolios and retirement plans within companies. We are also seeing enormous costs for consumers as treatment for this illness can be quite expensive. With all this information being processed we are working hard and hoping for the best on the horizon. For more articles and insurance advice on navigating this time, contact us.