RSA Group, the UK based insurance group, has warned reinsurers signed up to its Group Volatility Cover (GVC) and catastrophe reinsurance that it hopes to be able to pass on Covid-19 pandemic related losses, above certain levels, to each of those programs.
RSA has previously warned its reinsurance panel that its aggregate and core catastrophe programs would be expected to respond as Covid-19 related losses rose.
In announcing its results this morning, RSA Group has revealed growing claims expectations from the Covid-19 pandemic, as it has reported some 39,000 or so travel insurance claims costing UK £26 million, 2,700 cancellation claims largely related to weddings and costing it £9 million, plus claims under Business Interruption coverages with case reserves and actuarial IBNR amounting to £47 million.
The development in these figures during the second-quarter is partly down to increased claims coming in, RSA said, but the majority is actually due to the completion of reserve reviews which have led the company to update its ultimate estimates and IBNR for these lines of business.
RSA’s travel insurance claims have already triggered its reinsurance cover, as the £26 million loss fell to just £1 million net of reinsurance.
But the other areas, in particular the business interruption claims, are where RSA expects its aggregate reinsurance and catastrophe covers could come into play.
The insurer explained that, “We expect most other COVID- 19 related claims can be aggregated by week and applied against the Group’s GVC programme if over £10m, and against the Group’s Cat programmes if reaching higher levels.”
Adding that, “This is expected to provide substantial protection in relation to downside claims scenarios. So far, these coverages have not been applied.”
RSA also has a UK aggregate reinsurance program that could be affected by the business interruption claims if they continue to rise, as this covers losses between £3m and £10m, attaching when they exceed £50m up to £85m.
The companies main catastrophe retention is set at £75 million for the UK, which means it would need to see the BI related claims from Covid-19 increase significantly in the coming months.
With the FCA case looking into UK business interruption claims continuing, there is a chance RSA and others like it could see much higher losses if that pushes for claims to be honoured.
At the moment that remains uncertain, despite all the rhetoric coming out of the courts.
RSA puts reinsurers on-watch over Covid-19 claims aggregation was published by: www.Artemis.bm
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Original Article Posted at : https://www.artemis.bm/news/rsa-puts-reinsurers-on-watch-over-covid-19-claims-aggregation/