IMF | Research | 10
VI. KEY TAKEAWAYS
COVID-19 could have meaningful impact on insurers due to extensive financial dislocations across asset
classes and in, an extreme scenario, potentially large increases in morbidity and mortality. Life insurers with
high exposures to morbidity and mortality could be hit particularly hard if the pandemic proves difficult to control.
Mortality rates in severe scenarios could trigger large payouts relative to capital. Widespread asset-rating
downgrades and persistently low interest rates would add to the difficult environment. Financial stability
assessments should therefore examine the implications of the pandemic for insurers. In a scenario with
widespread bond rating downgrades, regulators should closely monitor and, as appropriate after all supervisory
measures have been taken, reassess linkages to rating actions within supervisory frameworks, while enhancing
supervision for insurers with risky holdings. Authorities looking to preserve credit supply should account for
changes in insurer risk appetite.
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