Insurance sector ‘resilient’ despite economic downturn

The insurance market remains ‘‘resilient’’ despite the financial downturn resulting from the Covid-19 pandemic, according to data and analytics company Hyperion X, a division of Hyperion Insurance Group.

After analysing its second quarter insurance sector earnings update for 2020, Hyperion X confirmed Covid-19 losses, while “significant”, were more of an earnings event and not a capital event for the market.

In a presentation given by David Flandro, managing director of Hyperion X, he explained that the first half of Covid-19 losses appear reasonable and, under current assumptions, there is no impact on sector capital in aggregate. 

Furthermore, Flandro confirmed that most capital raising has been opportunistic in an environment of rising rates with $16bn (£12bn) of new capital being raised in the first half of 2020, a $10bn (£7.6bn) year-on-year increase.

Flandro said: “Covid insured losses are significant and will likely add up to one of the largest insured loss events in history. This being the case, we can now say with increasing confidence what we have said from the beginning: these losses are manageable and are affecting earnings, not solvency.

‘‘Perhaps the most significant development emanating from Covid has been the fundamental changes in how the market assesses, intermediates, and underwrites risk, all of which can benefit clients.” 

He added: “Innovation has accelerated during the COVID crisis. It has driven new product design, expedited the creation and leveraging of better data, and accelerated the move to digital trading.

‘‘Hyperion is actively using technology to eliminate legacy intermediation thereby lowering acquisition costs for clients and markets. All of this will ultimately be positive for the end consumer.’’

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