COVID-19-related underwriting losses for the property/casualty insurance industry remain on track to reach as high as $80 billion, Chubb Chairman and CEO Evan Greenberg said in a sober assessment of the pandemic’s financial impact.
“We had pegged that underwriting loss somewhere in that $70 billion to $80 billion range, and I think it is ultimately going to play out here,” Greenberg concluded during Chubb’s Q4 2020 investor call on Feb. 3. [Chubb released healthy Q4 results the day before.]
Greenberg noted that global industry losses are already between $35 billion and $40 billion, “and that number is going to continue to climb.”
The reason why: multiple insurance lines will be majorly impacted before the pandemic plays out.
“So far, the focus is on [business interruption], and…I don’t think [BI] has run its course,” Greenberg said. “Beyond that there are a lot more casualty [losses] to come – D&O, employment practices liability and credit related.”
Greenberg acknowledged that the full loss picture hasn’t been easy to see yet, but he insisted it will happen.
“So far, we have had a recession that has been relatively credit loss proof, brought to you by central banks around the world and government policies,” he said in reference to global governmental financial aid meant to counter the pandemic’s impact. “That’s not going to last forever…There is more to come.”
In his initial remarks, Greenberg reflected on the idea that COVID-19 isn’t going to vanish any time soon anyway. He said the pandemic “might be more accurately viewed as an endemic…and which, despite the efficacy of vaccines and therapeutics, will likely be with us for years to come.”
COVID-19 and Cyber
Greenberg also touched on fast-evolving cyber risks. He said risk volume in the space has clearly increased due to the pandemic and the mass migration of employees from the office to less-secure work-from-home situations.
“Frequency of loss has been increasing as the world has digitized, and we gave it a huge shot during COVID and work-remotely conditions,” Greenberg said. “The world is more cyber and digitally integrated. That raises both exposure in terms of frequency of loss, but it also raises and continues to raise the catastrophe nature of the product because of the interconnectedness of everyone globally.”
Greenberg observed that cyber incidents, because they lack geographic boundaries, are “complicated, and the product has to evolve to recognize that kind of exposure both on the frequency side and the severity side.”
He said that Chubb’s cyber insurance cover is managed by experts who have learned to think quickly and adapt.
“You’ve got to at the same time be humble and know what you don’t know and not overimagine,” Greenberg said. “Even all the cyber experts are constantly surprised with new Day Zero events and techniques that emerge.”
Early on, Greenberg spoke intensely about the Jan. 6, 2021 rioters who disrupted congressional certification of the U.S. presidential election results and ransacked much of Congress, building on a statement he issued shortly after the incident. Again, he condemned the violence and restated his belief in the lawful voting results. He also offered a cautious assessment of the future.
“At the end of the day, the facts are the facts. All of the independent institutions we charge with overseeing our election process…opined and confirmed there was no widespread electoral fraud,” Greenberg said. “Just because you don’t like the political outcome doesn’t give you the right to make up your own facts or attempt to subvert our democracy and the rule of law. This isn’t going away and is a wakeup call to all of us who care about and love our country.”