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COVID’s costs; 3 P&C insurers report

We are starting to see the impact of COVID on P&C insurers’ financials; so far its not all gloom and doom.

AIG’s COVID costs totaled $458 million for the first half of 2020; Chubb announced $1.16 billion in COVID related costs for Q2, while Travelers‘ “pre-tax insurance losses directly related to the pandemic amounted to $114 million.” for Q2. (note AIG’s numbers are for six months, Chubb and Travelers for 3 months)

Travelers’s results are especially notable as it is the largest writer of workers’ comp insurance. Several quotes from the Q2 conference call merit attention:

  • beyond the healthcare sector, data from some of the state workers’ comp systems suggest that the COVID related claim rate is low relative to the infection rate.
  • That’s likely partly attributable to the fact that the population most seriously affected by COVID-19 skews older and is not the workforce.
  • [there were] fewer traditional workers’ comp claims as more people work from home.

It doesn’t look like workers’ comp is the biggest contributor, as COVID’s costs arose from travel insurance, personal auto refunds, reduced premiums, and lower renewals.

One example – AIG’s travel insurance business got crushed in the second quarter as “you had not only no new sales. You had cancellations…”

According to CEO Evan Greenberg, the $1.16 billion loss “is an estimate of our ultimate loss from the pandemic.”  Chubb’s net premiums written fell by $191 million, mainly from workers’ compensation and commercial casualty payments, including refunds on auto policies.’

Reading between the lines, it doesn’t look like Chubb’s investment income was significantly affected by COVID-related interest rate cuts; the huge insurer’s $112 billion in cash and investments increased by $3.4 billion in Q2 2020. (see CFO Phil Bancroft’s discussion in the transcript)


  1. COVID’s costs aren’t devastating P&C insurers.
  2. While interest rates have dropped, so far this hasn’t had much of an impact on insurers’ investment income.
  3. Insurers with less exposure in the US are doing better; other countries have handled COVID far better than we have.

One thought on “COVID’s costs; 3 P&C insurers report”

  1. You are doing the right thing.. to look at the overall impact on insurers by the pandemic. One element of that is the COVID-19 claims costs to WC insurers. These conditions would have cost employers much more than if exclusive remedy were not in place. WC is in this respect a real bargain for society in general and employers in particular

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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