AM Best: COVID-19 May Have Long-Term Implications on Trade Credit Risk (AM BestTV)

OLDWICK, N.J.--(BUSINESS WIRE)--In this episode of ^AMBestTV, Mathilde Jakobsen, director, analytics, AM Best Europe Rating Services, and Sridhar Manyem, director, industry research and analytics, AM Best Rating Services, say the COVID-19 pandemic could result in trade credit insurance claims reaching levels last seen during the 2008 financial crisis. Click on http://www.ambest.com/v.asp?v=tradecreditrisk420 to view the entire program.

Jakobsen said AM Best anticipates an increase in trade credit insurance losses with global recessions threatening the world economy.

“Depending on the level of increases in insolvencies, as well as the depth of the mitigating actions that insurers are taking, we could see claims ratios rise toward the level they reached in the global financial crisis of 2008 and 2009,” said Jakobsen.

Manyem said insurers will need to take a new look at their enterprise risk management strategies.

“With this particular pandemic, it is different from other catastrophes because it has been global in nature. It has not been confined to a specific country or a region, so there has been a global impact across multiple lines of business,” said Manyem. “Insurance companies will be looking at aggregate risk intolerances, stress testing across multiple lines as opposed to concentrating on siloed stress testing. Insurers can probably take the lesson learned from the global nature of this event and apply it to other events, such as a cyber scenario.”

To access the related Best’s Special Report, titled, “Trade Credit Insurance: COVID-19 May Have Long-Term Implications,” please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=295814.

Recent ^AMBestTV coverage includes:

• Insurers May Increasingly Look to Tap Federal Home Loan Bank: Jason Hopper, associate director, research and analytics, AM Best Rating Services, said insurers may turn to loans from the Federal Home Loan Bank to bolster liquidity as the COVID-19-led economic turmoil grows: http://www.ambest.com/v.asp?v=fhlb520.
• Car Insurers Return $10.5 Billion to Policyholders: Car insurers are returning $10.5 billion to policyholders through rebates and premium credits to reflect fewer claims and miles driven during the COVID-19 quarantine: http://www.ambest.com/v.asp?v=premiumrembursements420.
• AAM: Pandemic Pressures Insurers’ Investment Portfolios: Equity market uncertainty is creating challenges for life and property/casualty insurers, said Elizabeth Henderson, a principal and director of corporate credit at Asset Allocation & Management Co.: http://www.ambest.com/v.asp?v=henderson420.

^AM BestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at www.ambest.com/multimedia/ambtvsignup.html. View ^AM BestTV episodes at www.ambest.tv.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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