COVID-19 from a Consumer Perspective
COVID-19 and its Sectoral Impact
COVID-19 highlighted the challenges that the insurance industry faces in various aspects like “policy coverage limitations, falling asset values affecting capital, changes to customer attitudes, and difficulties recruiting and retaining talent” (PwC, 2020) The strong pre- COVID-19 economy and the strict solvency requirements imposed by the Solvency II Directive and Central Bank of Ireland, had enabled Insurers to enter into the pandemic with strong liquidity and capital. However, the reduction of new business and the economic slow-down will have a material impact on the insurer’s financial performance, growth, profitability and their capital. Furthermore, the low interest rates and low yield curve observed in Europe combined with a highly volatile financial market and corporate bonds have impacted insurer’s investment returns which is a fundamental part of its liquidity (Deloitte, 2020). With increases in claims, potential of a severe recession, low interest rates and a volatile market, Insurers may find themselves in distress and in need of more capital and liquidity (OECD, 2020).