By Favour Nnabugwu
US property and casualty (P&C) insurers reported premium returns of $8.5billion as a result of the Covid-19 pandemic in the first half of 2020, according to AM Best.
The most common return amount, where stated, appeared to be 15% of premium, with some returns as high as 25%, said Best.
The figures derive from a Best review of second-quarter 2020 statutory statement footnote disclosures related to Covid-19, which found that out of 2,525 US P&C insurers, 299 companies, in 71 groups and 15 single unaffiliated companies, reported premium returns. Best said that although the line of business on which premiums were returned was not always disclosed, automobile-related coverage was the most prevalent, due to reduced exposures resulting from the decline in travel following stay-at-home restrictions. Other lines included general liability, workers compensation, event cancellations and inland marine.
Some insurers noted that they expect to issue refunds in the third quarter, Best explained, while other insurers, while not returning premiums, allowed forbearance measures such as extending payment terms for premiums and suspending terminations for late or non-payments, or reported that they intended to lower rates.
Best added that it was too early to determine the net impacts of the decline in exposures related to the reduction in premiums, and any estimates would necessarily be very rough.