Munchkin "Insurance Rep" bad things
Items in your hand are safe from game effects unless explicitly targeted by the card description. I can't reach the rules from here, but that's made pretty clear - in the English rules, at least.

So my answer would be: Lose all items currently in your character's possession, whether equipped or merely carried.

Only items should be lost in this case - the character's class and race should be safe from the insurance industry.