NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases research on the new era of catastrophes. Throughout the history of property and casualty (P/C) insurance, the definition of “catastrophe” has largely focused on natural events such as hurricanes and earthquakes, followed by the occasional severe tornado. However, KBRA believes that with the current pandemic and recent wave of civil unrest, we have moved into a new era of catastrophe losses, which will further challenge the insurance industry’s enterprise risk management.
ISO’s Property Claim Services (PCS) unit recently declared the ongoing riots and civil unrest as a catastrophe event, the first since the Baltimore riots of 2015 and only the 13th since 1965. KBRA believes losses arising from the recent civil unrest, while concerning, are unlikely to have a meaningful impact on the overall capital position of the industry. While we acknowledge that coronavirus (COVID-19) pandemic losses may reach a significant level, in our opinion, these should be manageable. KBRA would consider 5% of surplus, or a $45 billion loss, as a significant event for the industry.
Along with recently elevated wildfire losses, KBRA also believes the first billion-dollar cyber loss event is well within the realm of possibility in the near term. If the first half of 2020 has taught us any lessons, insurers need to acknowledge the new realities emerging across the globe and continue to evolve their risk management frameworks accordingly.
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About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.