• AGCS report: traditional property and liability
  claims have been subdued during lockdowns but this was more than outweighed by
  a surge in Covid-19 related claims notifications, particularly from the
  entertainment industry.
• Impact of the pandemic will shape future loss
  trends for companies in the mid- and long-term with changes to working
  environments, travelling habits and supply chain networks.
• Detailed Covid-19-driven loss trend analysis
  for Property/Business Interruption, Liability, Financial Lines and Aviation
  insurance.

JOHANNESBURG/LONDON/MUNICH/NEW YORK/PARIS/SAO
PAULO/SINGAPORE-�Media OutReach�- 6 October 2020 - The Covid-19 pandemic is one of the
largest economic loss events in history for companies and insurers alike.
However, it's not only the magnitude of the impact which is unprecedented. Claims
trends and risk exposures are likely to evolve in both the mid- and long-term
as a result of the pandemic. With the reduction in economic activity during
lockdown phases, traditional property and liability claims have been subdued,
most notably in the aviation and cargo sector, but also in many other
industries with fewer accidents at work, on the roads and in public spaces,
according to a new report Covid-19 -- Changing Claims Patterns
from Allianz Global Corporate & Specialty (AGCS).

�

"The coronavirus
outbreak has reduced risk in some areas while, at the same time, changing and
heightening it in others. The wider changes in society and industry brought
about and accelerated by the pandemic are likely to have a long-term impact on
claims patterns and loss trends in the corporate insurance sector," says
AGCS Chief Claims Officer Thomas Sepp.
"The growing reliance on technology, shift to remote working, reduction in air
travel, expansion of green energy and infrastructure and a rethinking of global
supply chains will all shape future loss trends for companies and their
insurers."

�

Estimates
vary, but the insurance industry is currently expected to pay claims related to
the pandemic of as much as $110bn in 2020 according to Lloyd's. AGCS alone has
reserved about �488mn (US$571mn) for expected Covid-19 related claims,
especially for the cancellation of live events and the disruption of movie or
film productions in the entertainment industry.

�

Surged and
subdued
"We have seen claims in some lines of business, such as entertainment
insurance, surge during Covid-19, while traditional property and liability claims
have been subdued during lockdown periods," says AGCS Global Head of Claims,
Philipp Cremer. "There is still the potential for claims to occur as factories
and businesses restart after periods of hibernation, and given the longer
development patterns for third-party claims in casualty lines."

Claims
notifications from motor accidents, slips and falls or workplace injuries
slowed as more people stayed at home, and with the temporary closure of many
shops, airports and businesses during lockdowns across the world. AGCS also
noticed a positive impact on US claims settlement from the suspension of courts
and trials. Some claimants and plaintiffs have been more open to negotiating
settlements out of court rather than opting to wait a long time until their
case is scheduled -- a trend also highlighted in another recent AGCS
publication on liability loss trends. In general, claims activity is likely
to pick up again following resumption of economic activity.

�

The AGCS report
identifies the impact of the pandemic on claims trends in different lines of
insurance and how they might evolve in future:

Property/Business
interruption

Property damage claims were not
significantly impacted by Covid-19 as loss drivers such as weather are not
correlated. However, as production lines restart and ramp up, this can
exacerbate the risk of machinery breakdown and damage and even fire and
explosion. "Restarting a factory is a stress test. We have already seen a few
claims related to ramp-ups in the past few months -- and there may be more to
come", says Raymond Hogendoorn, Global Head of Short-Tail Claims, AGCS. In
addition, with fewer people potentially onsite, inspections and maintenance may
be delayed or loss incidents such as a fire or escape of water may be noticed
too late, increasing the severity of damage.

�

Covid-19 has caused business
closures and disruptions globally -- which often may not be covered in the
absence of physical damage as trigger of coverage. However, the pandemic has impacted
the settlement of standard business interruption (BI) claims in different ways.
On one hand, factories in hibernation will not produce large BI claims, as many
manufacturers, their customers and suppliers, either shut down or scale back
production. When a US automotive supplier was hit by a tornado in spring, the
resulting business interruption loss was lower than it would have been during
normal operations. Conversely, containment measures during lockdowns can lead
to longer and more costly disruptions as access restrictions prevent effective
loss mitigation and prolong the reinstatement period, as a fire and explosion
at a chemical plant in South Korea demonstrated.

�

Meanwhile manufacturers across the
Asia Pacific vary widely in the journey through the Covid-19 pandemic. China is
broadly beginning to restart its operations amid recovering domestic demand,
while other markets like Southeast Asia, Japan and South Korea are still
tackling cases and factories remain under a range of controlled measures to
stop the spread.

�

Liability and Directors
& Officers (D&O) �nsurance

To date, AGCS has only seen a few
liability claims which are Covid-19 related. However, liability claims are
typically long-tail with a lag in reporting, so general liability and workers'
compensation claims related to Covid-19 may yet materialize. A number of
outbreaks of coronavirus have been linked to high-risk environments such as
gyms, casinos, care homes, cruise ships or food/meat processing plants.

�

A wave of insolvencies, as well as
event-driven litigation, could be potential sources of D&O claims. To date,
only a relatively small number of securities class action lawsuits related to
Covid-19 have been filed in the United States, including suits against cruise
ship lines that suffered Covid-19 outbreaks. The pandemic could trigger further
litigation against companies and their directors and officers, if it is
perceived boards failed to prepare adequately for a pandemic or prolonged
periods of reduced income.

�

Aviation

The aviation industry has seen
few claims directly related to the pandemic to date. In a small number of
liability notifications, passengers have sued airlines for cancellations or
disruptions. Slip and fall accidents at airports -- traditionally one of the
most frequent causes of aviation claims --
have declined with the massive reduction in global air traffic, which fell by a
record 94% year-on-year in April 2020.

�

"Although a large proportion of
the world's airline fleet have been grounded loss exposures do not just
disappear. Instead they change and can create new risk accumulations," says
Joerg Ahrens, Global Head of Long-Tail Claims at AGCS. For example, grounded
aircraft might be exposed to damage from hurricanes, tornados or hailstorms.
The risk of shunting or ground incidents also increases and can result in
costly claims.

�

The International Air Transport
Association (IATA) estimates that the Asia Pacific aviation industry, which was
the first region to feel the brunt of the Covid-19 crisis, will lose
approximately US$29billion in 2020, more than a third of the US$84billion globally.

�

Long-term claims trends

Covid-19 is accelerating many
trends such as a growing reliance on technology and rising awareness of the
vulnerabilities of complex global supply chains. Going forward, many businesses
are expected to review and de-risk their supply chains and build in more
resilience. This could involve some reshoring of critical production areas
because of disruption caused by the pandemic. Such a move would likely impact
frequency of claims and the costs of any future business interruptions.

�

Meanwhile, the growth of home
working means that companies may have lower property assets and fewer employees
on site in future, but there would be corresponding changes in workers`
compensation and cyber risks. During the pandemic cyber risk exposures have
heightened, with reports of the number of ransomware and business email
compromise attacks increasing. �To date, AGCS has only seen a small number
of cyber claims which are Covid-19 related however.

�

Digital claims handling

Covid-19 has also reinforced the
need for digitalization of claims handling. Remote claims inspections and
assessments for tornados, floods or major industry accidents are now possible
through satellite, drone or image capture technology and tools such as MirrorMe.
"Just a few years ago, claims processes were mostly manual and paper-based and
many people could not have imagined handling claims remotely," says Cremer. "Now
technology plays a key role. AGCS' cloud-based claims platform has passed the
test of the coronavirus with our digital claims processes proving resilient
throughout the lockdown. This, together with a strongly collaborative approach
from our clients and brokers, has enabled our claims teams to handle a surge in
claims and deliver expert service without disruption while working remotely."

�

About Allianz Global Corporate & Specialty SE

Allianz
Global Corporate & Specialty (AGCS) SE is a leading global corporate
insurance carrier and a key business unit of Allianz Group. We provide risk consultancy, Property-Casualty insurance solutions and alternative risk
transfer
for a wide spectrum of commercial, corporate and specialty risks across 10
dedicated lines of business.

Our customers
are as diverse as business can be, ranging from Fortune Global 500 companies to
small businesses, and private individuals. Among them are not only the world's
largest consumer brands, tech companies and the global aviation and shipping
industry, but also wineries, satellite operators or Hollywood film productions.
They all look to AGCS for smart answers to their largest and most complex risks
in a dynamic, multinational business environment and trust us to deliver an
outstanding�claims experience.

Worldwide,
AGCS operates with its own teams in 32 countries and through the
Allianz Group network and partners in over 200 countries and territories,
employing over 4,450 people. As one of the largest Property-Casualty units of
Allianz Group, we are backed by strong and stable financial ratings. In 2019, AGCS
generated a total of �9.1 billion gross premium globally.

www.agcs.allianz.com

LinkedIn

Twitter: @AGCS_Insurance

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