Specialty insurance sector could be facing a massive coronavirus hit

A new release from financial analysis firm Demotech has revealed that in addition to the business interruption insurance segment, there is another sector facing immense stress caused by the COVID-19 pandemic – credit insurance. According to the release, there were 102 insurers as of December 31, 2019 that reported direct premium written for credit insurance. Direct premium written for credit insurance for those insurers was $2.2 billion at year-end 2019. Of the 102 credit insurers, the top 20 writers accounted for more than $1.9 billion – 86% of the total amount. Among the top 20 writers, credit insurance comprised about 7% of their books of business. Demotech suggested that insurers that write credit unemployment insurance will see a surge in claim frequency and severity due to the unemployment resulting from efforts to mitigate the coronavirus outbreak in the first and second quarters of 2020. The analytics firm hopes that the top 20 credit insurance writers’ adequate diversification of their books of business will allow them to manage this spike in exposure due to the pandemic.