Global reinsurers may face higher levels of risk than life and health insurers in the coronavirus outbreak, as the risk profiles of the former involves higher exposures to mortality and morbidity risks, says rating agency AM Best.
Overall, the life and health (L/H) insurers sector can bear the cost of mortality and morbidity stresses, although insurers need to be able to quantify all aspects of pandemics, including economic and operational risks, according to their published commentary.
Most L/H companies have addressed pandemic risks by conducting stress tests for various modeled assumptions. Moreover, insurers with tested economic capital models are positioned better to combine the impact of a contraction in GDP with increases in mortality and morbidity. A critical aspect of how companies handle these events lies in enterprise risk management.
Higher Exposures 
Reinsurers typically have higher exposures to mortality and morbidity risks and may have as much as 40 percent or more of the required capital held for these risks before diversification.
However, in an effort to minimize the concentration of these risks, global reinsurers have been broadening their risk exposures to include financial solutions, asset management solutions, and other annuity risk arrangements.
Some Losses
P&C insurers may suffer some losses due to business interruption, event cancellations and travel-related covers, but these losses will be manageable for them. Overall, technological advances should assist in minimizing any impact, due primarily to communications and reductions in response time for care delivery.
The coronavirus has infected more than 20,000 people since it was first reported from Wuhan on 31 December. The majority of cases are in China, particularly in the city of Wuhan where the virus is thought to have originated, with more than 300 people now believed to have been killed.

Leave a Reply

e: [email protected] | t: +852-8191-5120 (hong kong) | t2: 050-5806-7296 (from japan)