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July 17, 2020

Canadian government in discussion with Lloyd’s for insurance partnership

By Verdict Staff

The Canadian government is in an ‘exploratory discussion’ with the Lloyd’s of London to form public-private insurance partnership, the Financial Post has reported.

This prospective insurance partnership is aimed at helping the government to withstand systemic risks to the economy from ‘black swan’ events, such as the coronavirus pandemic.

According the report, the UK-based insurer has been in talks with the Department of Finance Canada about a reinsurance model which aims to avoid emergency aid governments are forced to inject to the economy as the aftermath of such events.

This model is said to offer governments a more controlled method of managing events when claims outstrip available funds to cover them.

Under this scheme, the government would provide a guarantee or backstop which would largely consists of pooled insurance industry funds and private capital.

Lloyd’s of London CEO John Neal  told the publication that a number of other governments including Britain, the European Union, and Singapore have also expressed interest in the company’ pitch.

The new model aims to eliminate the shortcomings in traditional insurance that the current pandemic exposed.

The governments around the world have reportedly committed an estimated $16tn in emergency pandemic aid including loans, wage and rent supports.

Earlier, this month Lloyd’s issued a set of solutions to speed up global economic and social recovery from the Covid-19 pandemic.

The insurer expects to pay out about $4.3bn in insurance claims globally due to the pandemic-driven shutdown.

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