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Law360, London (September 7, 2020, 2:31 PM BST) -- Insurers said on Monday that the financial impact of COVID-19 on the industry could be between $50 billion and as much as $100 billion globally, and cautioned that the full impact will not be known until at least the end of the year.
The industry is "particularly concerned about conclusions being drawn too fast" by regulators over the pandemic, trade body Insurance Europe said.
The Brussels-based lobby group was responding to a consultation by the International Association of Insurance Supervisors, which closed on Friday. The international standards body for regulators requested information in March to help it assess the impact of the pandemic on the sector.
Insurance Europe said that regulators should take a long-term view of the situation instead of rushing to impose policy measures that could be "inappropriate."
"The COVID-19 situation continues to evolve, which means that it will not be possible to fully understand the impact of the pandemic before the end of 2020 at the earliest," the trade body said.
There has been a varied impact on the industry because governments have adopted different measures in response to the crisis, the lobby said.
"This means that the ultimate impact of the pandemic on the insurance sector in general and on insurance products specifically can only be assessed on the basis of figures that reflect the longer term, and notably on the basis of products' full life cycles, rather than mid-term in policy periods," Insurance Europe said.
The trade body said it is crucial that regulators adopt "a certain level of supervisory flexibility" because of the uncertainty.
In the wake of the crisis, many regulators, including the U.K.'s Prudential Regulation Authority, pressured insurers into canceling dividends. Insurance Europe said the Solvency II Directive already contained provisions that would mean dividends payments would be canceled if solvency capital fell below regulatory thresholds.
"Insurance companies therefore set their dividend policy and make dividend decisions very carefully, taking into account their solvency levels, business plans, risk profiles and risk appetites, as well as any significant events that could have a material impact," the trade body said.
--Editing by Ed Harris.
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