Lloyd's pegs Covid-19 losses at up to $4.3bn
Global industry losses will exceed $100bn, while asset hit will amount to $96bn, Corporation says
The Covid-19 pandemic will cost the Lloyd’s market as much as $4.3bn, the corporation revealed today.
Lloyd’s said its preliminary estimates showed the market would pay out in the range of $3bn to $4.3bn in classes such as event cancellation, property and travel.
This is on a par with the September 11, 2001 terror attacks and the impact of hurricanes Katrina, Rita and Wilma in 2005.
But Lloyd’s warned losses could rise further if lockdowns continue beyond the second quarter. Further payouts are also expected across classes such as directors’ and officers’ liability, professional indemnity and credit insurance.
The Lloyd’s study also estimated the global re/insurance industry’s 2020 underwriting losses from Covid-19 to be $107bn.
This is the largest industry loss estimate to date for the pandemic. Willis Towers Watson has put Covid-19-related losses for US and UK insurers, including the London market, at up to $80bn.
In addition, to the underwriting losses through the profit and loss account, Lloyd's looked at the reduction in the value of investments which insurance companies hold to fund future claims payments.
Lloyd's estimated the industry will experience falls in investment portfolios of an estimated $96bn.
This would bring the total projected loss to the insurance industry from the pandemic to $203bn.
The study took account of the current pay out estimates assuming continued social distancing and lockdown measures through 2020, as well as the forecast drop in GDP globally
Over half of the Lloyd’s pay outs are expected to relate to US and worldwide covers, with nearly 60% of the losses coming from event cancellation business and property covers.