Lloyd's of London braced for virus claims as market dive delivers £1.8 billion hitComments Off on Lloyd's of London braced for virus claims as market dive delivers £1.8 billion hit
Lloyd’s of London on Thursday said it was too early to assess insurance losses from coronavirus as it revealed a £1.8 billion hit on investments.
The 334-year-old marketplace, which provides a venue for brokers and underwriters to trade insurance, faces a two-pronged headache, first on claims and second on the performance of investments which help meet claims.
Lloyd’s £30 billion investment portfolio made £3.5 billion last year but is down by £1.8 billion this year due to the slump in bond yields.
Chief executive John Neal said it was too early to assess the size of insurance losses but a preliminary figure should be available in early May.
The corporation has asked firms to estimate the ultimate potential losses from Covid-19 and report back.
Lloyd’s has already designated coronavirus a major claims event, which is classified as any disaster leading to more than £100 million of claims.
Chairman Bruce Carnegie-Brown said: “I would not be surprised if it didn’t aggregate into something similar to the larger natural catastrophe claims we have had througn the past few years.”
Lloyd’s largest net loss last year was Typhoon Hagibis, which cost £500 million.
The industry has come under fire for its response to the crisis after suggestions most claims will not pay out due the wording on many business interruption policies, which mostly do not cover pandemics.
The Treasury Select Committee head Mel Stride has demanded answers from the Association of British Insurers about the industry’s response to the crisis.
Bruce Carnegie-Brown said Lloyd’s had identified at least 14 different types of policy which may be triggered by corona claims including event cancellation, travel claims and workers compensation.
He said: “We think there will be a large number of claims which come through.
“The controversy over business interruption is specific to the fact that these covers are available but most people don’t buy them.
“We see customers who experienced claims on things like Sars and Ebola buy them but most customers do not because they did not imagine it was a risk to the business.
“It was not seen as a risk so it’s not surprising a number of people find themselves uncovered for a risk that now seems pretty serious.”
The corporation swung back into profit last year after two consecutive periods in the red.