• AGCS report: traditional property and liabilityclaims have been subdued during lockdowns but this was more than outweighed bya surge in Covid-19 related claims notifications, particularly from theentertainment industry.
• Impact of the pandemic will shape future losstrends for companies in the mid- and long-term with changes to workingenvironments, travelling habits and supply chain networks.
• Detailed Covid-19-driven loss trend analysisfor Property/Business Interruption, Liability, Financial Lines and Aviationinsurance.

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

"The coronavirusoutbreak has reduced risk in some areas while, at the same time, changing andheightening it in others. The wider changes in society and industry broughtabout and accelerated by the pandemic are likely to have a long-term impact onclaims patterns and loss trends in the corporate insurance sector," saysAGCS Chief Claims Officer Thomas Sepp."The growing reliance on technology, shift to remote working, reduction in airtravel, expansion of green energy and infrastructure and a rethinking of globalsupply chains will all shape future loss trends for companies and theirinsurers."

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

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

Claimsnotifications from motor accidents, slips and falls or workplace injuriesslowed as more people stayed at home, and with the temporary closure of manyshops, airports and businesses during lockdowns across the world. AGCS alsonoticed a positive impact on US claims settlement from the suspension of courtsand trials. Some claimants and plaintiffs have been more open to negotiatingsettlements out of court rather than opting to wait a long time until theircase is scheduled -- a trend also highlighted in another recent AGCSpublication on liability loss trends. In general, claims activity is likelyto pick up again following resumption of economic activity.

The AGCS reportidentifies the impact of the pandemic on claims trends in different lines ofinsurance and how they might evolve in future:

Property/Businessinterruption

Property damage claims were notsignificantly impacted by Covid-19 as loss drivers such as weather are notcorrelated. However, as production lines restart and ramp up, this canexacerbate the risk of machinery breakdown and damage and even fire andexplosion. "Restarting a factory is a stress test. We have already seen a fewclaims related to ramp-ups in the past few months -- and there may be more tocome", says Raymond Hogendoorn, Global Head of Short-Tail Claims, AGCS. Inaddition, with fewer people potentially onsite, inspections and maintenance maybe delayed or loss incidents such as a fire or escape of water may be noticedtoo late, increasing the severity of damage.

Covid-19 has caused businessclosures and disruptions globally -- which often may not be covered in theabsence of physical damage as trigger of coverage. However, the pandemic has impactedthe settlement of standard business interruption (BI) claims in different ways.On one hand, factories in hibernation will not produce large BI claims, as manymanufacturers, their customers and suppliers, either shut down or scale backproduction. When a US automotive supplier was hit by a tornado in spring, theresulting business interruption loss was lower than it would have been duringnormal operations. Conversely, containment measures during lockdowns can leadto longer and more costly disruptions as access restrictions prevent effectiveloss mitigation and prolong the reinstatement period, as a fire and explosionat a chemical plant in South Korea demonstrated.

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

Liability and Directors& Officers (D&O) Ìnsurance

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

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

Aviation

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

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

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

Long-term claims trends

Covid-19 is accelerating manytrends such as a growing reliance on technology and rising awareness of thevulnerabilities of complex global supply chains. Going forward, many businessesare expected to review and de-risk their supply chains and build in moreresilience. This could involve some reshoring of critical production areasbecause of disruption caused by the pandemic. Such a move would likely impactfrequency of claims and the costs of any future business interruptions.

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

Digital claims handling

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

About Allianz Global Corporate & Specialty SE

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

Our customersare as diverse as business can be, ranging from Fortune Global 500 companies tosmall businesses, and private individuals. Among them are not only the world'slargest consumer brands, tech companies and the global aviation and shippingindustry, but also wineries, satellite operators or Hollywood film productions.They all look to AGCS for smart answers to their largest and most complex risksin a dynamic, multinational business environment and trust us to deliver anoutstanding claims experience.

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

www.agcs.allianz.com

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