- Lloyds to Payout £3.5bn due to COVID-19!
Lloyds to Payout £3.5bn due to COVID-19!
The world’s leading insurance market, Lloyds of London is set to payout up to £3.5bn due to COVID-19. The eye-watering amount comes as a result of an economic study by Lloyds of London to understand the extent of the losses that come through due to the pandemic. Almost two-thirds of these claims will come from event cancellation and property. Losses could rise even further if lockdowns continue into another quarter.
John Neal, CEO of Lloyd’s, said:
“The global insurance industry is paying out on a very wide range of policies to support businesses and people affected by COVID-19. The Lloyd’s market alone is currently expected to pay claims amounting to some $4.3bn, making it one of the market’s largest pay-outs ever. What makes COVID-19 unique is that it’s not just the devastating continuing human and social impact, but also the economic shock. Taking all those factors together will challenge the industry as never before, but we will keep focused on supporting our customers and continuing to pay claims over the weeks and months ahead.”
How Do COVID-19 Claims Compare?
The estimated 2020 underwriting losses covered by the industry as a result of COVID-19 are approximately $107bn, on par with some of the biggest major claims years for the industry, such as when three catastrophic windstorms have struck (2005: hurricanes Katrina, Rita and Wilma; 2017: hurricanes Harvey, Irma and Maria). Importantly, these natural catastrophes were geographically contained events, occurring over the course of hours and days – vastly different in nature to the global, systemic and longer-term impact of COVID-19.
In addition to managing wide-ranging payouts across sectors and geographies, the experts, entrepreneurs and innovators drawn together by the Lloyd’s market have already started creating new policies to support the immediate health response as well as the longer-term exit strategy. This includes the search for diagnostics, treatments and vaccinations, where one Lloyd’s syndicate is insuring more than 100 individual clinical trials taking place around the world investigating all stages of COVID-19.
Lloyd’s plans to announce a series of further initiatives in the coming weeks as it continues to work with government, industry and business to support the short, medium and long-term response to COVID-19. One initiative under consideration includes establishing a ‘Recover Re’ insurance vehicle offering “after the event” cover for pandemic related business recovery, including the current COVID-19 pandemic.
Our teams are working with insurers including markets within Lloyds of London to ensure claims are settled where possible. This event has been truly unprecedented, we remain optimistic that as an industry we can continue supporting the economy during and after the pandemic.