Although considerable uncertainty remains over its ultimate cost, the COVID-19 pandemic looks set to rank among the re/insurance sector’s most expensive events, according to a report published by reinsurance broker Guy Carpenter.

Not only does the pandemic have the potential of causing unknown loss impacts, but it also is likely to be one of the slowest developing catastrophes the industry has ever encountered, which is likely to create a prolonged period of uncertainty, said the report by GC Capital Ideas, which was issued on June 24.

Taking insured catastrophe losses that have already occurred year-to-date, along with the catastrophe claims that are typical in the second half of the year, Carpenter noted that losses for fiscal year 2020 are likely, at a minimum, to approach $100 billion for only the fourth time ever.

Guy Carpenter said 2020 could end up being the most expensive loss year ever, if claims from COVID-19 settle at the higher end of current market estimates or losses aggregate elsewhere – for example, from the ongoing unrest in the United States or an active wind season. This could further test “the limits of some carriers’ capital resilience,” added the report.

The report went on to discuss some positive factors that are offsetting the negative news for carriers.

Certain lines of business, such as personal and commercial auto, have benefited from an immediate dip in claims frequency due to the lockdowns, providing positive offsets, the report continued.

“Additionally, the fundamentals of reinsurance remain strong: the sector’s capital base has been resilient to the recent financial market volatility, and there are still opportunities in this environment for (strongly capitalized) carriers to offer new solutions and grow selectively into challenged lines,” Carpenter said.

*This story ran previously in our sister publication Insurance Journal.