But Covid-19-related claims could still undo all the insurer’s hard work to date
By insights editor Matt Scott
Going into the half year results season, analysts had predicted a shrinking of the amount Zurich was able to release from reserves.
When the results were announced, however, reserving had remained stable and all the talk was about how prices were rising faster than claims inflation.
Indeed, commercial rates in the insurer’s North American business rose by 18% and in EMEA by 12%, and with Covid-19 expected to drive rates even higher, Zurich will be hoping to stay one step ahead of the claims inflation that has dogged so much of the market.
In the UK, meanwhile, the insurer’s half year results revealed a £140m hit from coronavirus related claims hitting the GI business, pushing the insurer’s UK arm to a £63m loss for the first half of the year.
And when Zurich’s life insurance business is added to the equation, the total impact of coronavirus on the insurer’s UK business stands at £212m. So far.
Should insurers lose the business interruption test case, Zurich UK chief executive Tulsi Naidu has estimated that the insurer could also be facing a further $200m of claims, net of reinsurance.
Zurich, along with the other insurers being tested by the FCA, will of course be hoping that the High Court comes down on their side, but for Zurich the stakes could be higher than for many of its competitors.
The insurer has been pinning a lot on its SME book, investing in a digital platform that has so far “delivered a 42% year-on-year increase in new business and a 23% uplift in customer numbers”.
And with the insurer’s e-trading business also “trading very, very strongly through the pandemic”, Naidu and the wider Zurich business will be hoping that any adverse effect of the business interruption test case does not hinder any progress as it looks to emerge from the Covid-19 pandemic.
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