The pandemic has caused governments around the world to lock down economic activity for several months, an unprecedented radical measure that leads to uncertainty about the real impact it will have on activity. For this reason, sometimes there’s no choice but to analyze crises that have occurred in the past in order to explore the possible effects of the pandemic on the economy or a particular industry. MAPFRE Economics has done precisely this with the insurance industry.
In its quarterly update of the “2020 Economic and industry outlook” report, it analyzes the evolution of global premiums in major health and economic crises with the aim of shedding some light on the possible effect of the COVID-19 crisis on insurance demand. In particular, in the economic sector, it focuses on the dotcom crisis, the global crisis sparked by the Lehman Brothers crisis, and the European crisis from 2011 to 2013; and in the health sector, on SARS-CoV, bird flu in 2009 and 2010 and various infections recorded between 2012 and 2015 (MERS/Ebola/Zika).
Following the analysis, MAPFRE Economics experts conclude, first of all, that a single relationship between insurance premium performance and the last three global epidemic crises cannot be established. Non-Life and Life premiums have never reacted unequivocally and widely to these events.
They do, however, indicate that there is some concurrence in alterations of nominal premium dynamics when the three epidemics occurred, visibly accelerating and decelerating in many cases. This is especially true of Non-Life insurance. “However, we felt that this was a nominal effect (because it happens mainly in high-inflation emerging countries) and that it occurred in countries that recovered from a previous economic crisis and rebuilt their savings bases (such as in Europe and North America during the bird flu that followed the moderation of the Lehman Brothers economic crisis),” they explain. The most obvious case of insurance premium acceleration or deceleration was during the bird flu epidemic. However, experts at MAPFRE Economics attribute this to the fact that this situation