But insists these remain within the insurer’s risk tolerance
Zurich has estimated its property and casualty claims related to the Covid-19 crisis will total $750m over the course of 2020, of which $280m has been recognised in the first quarter.
The insurer said this remains within the group’s risk tolerance, but that “the continuing nature of the event means that this is subject to significant uncertainty”.
In response to the crisis, the insurer is providing additional financial relief to customers through premium rebates, payment holidays and extensions of coverage, and said it is simplifying customer interactions by creating or expanding options to report claims by video, sign documents electronically or request remote risk assessments.
The group is also supporting commercial customers by sharing knowledge of how to manage risk and to protect employees. The Farmers Exchanges, which are owned by their policyholders, have announced around $300m of premium rebates to their small business and personal auto customers.
Group chief executive officer Mario Greco said the digitalization of the business has also helped the insurer in its response to the coronavirus crisis.
“Throughout this crisis our priority has been to support our customers and local communities, while ensuring the safety and wellbeing of our colleagues,” he said. “We acted in a socially responsible way by closing our offices early to work remotely, keeping our business fully operational. In this environment, our investments in the digitalization of our business are paying off.
“We have responded to the heightened need for remote and flexible services by creating or expanding our digital offering for individual and business customers alike. We expect the crisis to strengthen demand for digital interactions and better tailored services and are committed to the expansion of our digital offering as this trend gathers pace. Our flexible and resilient business model positions the Group well to quickly adapt to changing situations and requirements to deliver continued success.”
Gross written premiums (GWP) in the group’s property and casualty business grew to $9.7bn for the first three months of 2020, an increase of 7% on the same period in the previous year once adjusted for currency fluctuations, acquisitions and disposals.
The biggest increase in GWP was experienced in Europe, the Middle East and Africa, where premiums grew by 8% to $5.3bn, making it the largest region for the insurer.
Globally, this growth was supported by increasing premiums, with the insurer’s North American business experiencing overall rate increases of 12% in the first quarter, compared to 10% in the fourth quarter of 2019 and 7% for the full year 2019.
The insurer also said that a series of European winter storms, together with a number of climatic events in North America, contributed to a relatively elevated level of natural catastrophe and weather- related claims compared to historical first-quarter levels.
But group chief financial officer George Quinn said this still represented a strong start to the year for the insurer.
“The Group reported a solid start to the year with P&C growth and pricing remaining favorable, a steady performance from Farmers, while life performed well against a very strong first quarter in 2019,” he said.
“The impact of claims related to the COVID-19 outbreak and the sharp falls in financial markets in the latter part of the first quarter are expected to remain a 2020 earnings event. Group solvency remains strong and together with the diversity of our business and our conservative balance sheet, I am confident that the Group is well placed to manage the current challenges.”