The (re)insurance market stated that once the full scale and complexity of the outbreak is fully understood, the total cost to the non-life insurance industry will be in excess of historical events such as 9/11, or the combined costs of 2017 hurricanes Harvey, Irma and Maria.
Lloyd’s added that losses could increase further if the lockdown continues into another quarter, as its current estimate is based on the assumption it will last until the end of 2020.
Where is the Lloyd’s Covid-19 payout going?
Lloyd’s said its own customers’ payouts will be split by geographies, as well as class of business.
The US and Worldwide regions will account for 58% of the payouts, while the UK will account for 15%.
Other regions receiving a share are Rest of World (10%), Europe (7%) and Other (10%).
In terms of class of business, event cancellation will receive the most with 31%, followed by property (29%), credit lines (11%) and 15 other classes (29%).
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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 payouts ever.
“What makes COVID-19 unique is 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.”
Lloyd’s has started creating new policies to aid the immediate health responses, as well as long-term strategies to combat Covid-19
This includes the search for diagnostics, treatments, and vaccinations.
Running parallel to its £15m ($18.2m) support package for charities responding to the disease, Lloyd’s has also repurposed existing innovation initiatives in its Innovation Lab and Product Innovation Facility.
This is to fast-track the development of insurance products to support the fight against Covid-19.
Neal added: “Alongside making record payouts, we have been turning our attention to what more we can do to support business and society through this incredibly difficult time.
“In addition to our £15m package of charitable donations, we have set aside £15m in seed capital to explore how the industry can create or house structures which support economic recovery and mitigate against future events of this magnitude.
“We are also working with our Advisory Committees to develop a number of initiatives to support our customers and economic recovery in the short, medium and long-term.”
Lloyd’s is preparing to announce more initiatives in the near future. One under consideration is a “Recover Re” vehicle insurance offering to cover “after the event” for pandemic-related business recovery.