Insurers impacted by coronavirus twice over

Global insurers are now being threatened with coronavirus from two directions – a sharp increase in payouts and at the same time, significant investment losses. While initially a low level of claims was expected because epidemics are excluded from many business insurance policies, a recession that might be in the cards for the global economy puts companies with trade credit insurance, including airlines and retailers, under strain. This is happening alongside added pressure on insurers’ investments, which comprise around $20 trillion in assets alongside problematic big government bond holdings, according to Reuters. Trade credit insurance covers the risk that a company’s customers cannot pay for goods or services bought on credit, and represents an $11 billion market. Moody’s predicts that rising claims will hit three of the world’s biggest trade credit insurers – Atradius, Coface and Euler Hermes. The ratings agency pointed to data from Atradius and Coface to show that for each company, almost 15% of their total net potential exposure is in the hard-hit regions of Asia and Australia.