The equity market crash, potential defaults on corporate bonds and reduced yields on government bonds pointed to near-term depletion of book value and longer-term headwinds for earnings.
Alongside this, 20-30 percent reductions in GDP provided something like a baseline for expectations of the collapse in premium levels for insurers, with a significant problem brewing around clients' reduced ability to pay.
Compared to these issues, the likely underwriting loss was described by multiple underwriting sources in the early weeks of the crisis as "manageable". There would be sizeable losses in certain areas like contingency, trade credit and long-term care.
But as long as lawmakers and the courts did not wholesale overturn exclusionary language on pandemic, coronavirus was a medium-sized cat loss – albeit spread over many lines of business.
That assessment may still prove to be correct, but in recent days it feels as if there has been a shift in the balance of probabilities toward a more severe underwriting loss.
The key driver of this development is the emergence of fears of additional insured property losses beyond the affirmative and highly sub-limited cover sold by the likes of FM Global.
The initial industry focus was on the US property market owing to the concentration of exposures. The wording in the US is said to be tight, which prompted a focus on the risk arising from lawmakers retroactively overturning exclusions or courts effectively widening coverage.
While this remains a defining fight for the future of the industry's incumbent players, it may mean that attention has been distracted from the scale of the loss in other parts of the global property book.
Since this publication reported the intense pressure it was coming under from retail brokers, Hiscox has become the lightning rod for the issue of broad wording not designed to cover pandemic, but which some believe is loose enough that it offers BI coverage.
But the issue of policies that could be reasonably interpreted as extending coverage is certainly broader than just Hiscox, with other unconfirmed examples cited to this publication in both the US and the UK.
Loose policy language will come under sharp pressure as distressed businesses seek financial help from any source where they can find it, and in some cases it will not hold.
Certain marketplaces also seem to have taken a much more accommodative stance to pandemic risk than the US. Canadian regional insurer Gore Mutual granted pandemic coverage to some of its clients, and it has already notified an expected loss to its cat reinsurers.
It will not be the only Canadian firm to incur losses, or to tap the reinsurance market. Other countries of concern for reinsurers include Ireland, the Nordics and Malaysia.
These may not be peak zones, but the aggregation risk given the systemic nature of the loss is huge, creating scope for losses that hit cat programmes to rapidly escalate.
As claims notifications start to come in, reinsurers are increasingly zeroing in on the threat from this quarter.
The mounting fears of a property loss large enough to trigger cat treaties comes alongside two other red flags as bad news accumulates.
The first was QBE's $825mn capital raise, which it announced alongside a series of de-risking measures, including buying increased reinsurance and selling its equity portfolio.
The shock of a first capital raise in the sector is sure to raise additional concern.
The second was a ramping up of political pressure on the industry. President Trump entered the debate on exclusions last week by saying that unless policies expressly excluded pandemic, he would expect insurers to pay out for BI losses.
And he was followed by an eye-catching move from California insurance commissioner Ricardo Lara, who has ordered carriers to rebate premiums in at least five lines – including a range of commercial lines – where exposures have fallen. The move seems to suggest that insurers' opening bids on premium rebates in lines like auto, and some commercial covers, have failed to ward off regulators.
All told, it has been a bad week for carriers, and there could well be far more to come.
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