Insurers set for high Covid-19 based payouts will be hit harder by catastrophe claims towards the end of the calendar year.

This is according to GlobalData senior insurance analyst Daniel Pearce, who said the recessionary impact of the pandemic will have a range of impacts on insurers’ balance sheets that make them less resilient to catastrophes.

“The combination of natural catastrophes, volatility in financial markets and economic recession will put the insurance industry under considerable strain.

According to Pearce, the full impact will not be known until later in 2020 – once the majority of natural catastrophes pass and the severity of the economic implications become clearer.

But he said it’s not just claims, but also the affect on investments held by insurers that could have an impact on finances.

“Insurers’ exposure to financial markets through the investments they hold has been negatively impacted, as financial markets globally have fallen to unprecedented levels,” he added.

“Combining this with record-low interest rates, which have been set to provide some relief to economies anticipating recession, means the pressure on insurers’ balance sheets has increased dramatically.

“The economic impact will not only be felt through financial market volatility but also the potential downturn in the demand for commercial insurance as economies slide into recession and businesses are forced to close.

“With the hurricane and typhoon season yet to arrive for 2020, the insurance industry is braced for a turbulent future.”