Lloyd’s, the Insurance marketplace of London has said its members are set to pay out claims worth $4.3bn (£3.5bn) due to the COVID-19 outbreak. It also warned that the entire industry may stand to lose a record $200bn.
Lloyd’s of London announced on Thursday its members will pay out claims worth between $3bn and $4.3bn on a range of policies covering the pandemic. Most claims are for cancelled events, property cover, and disrupted travel caused by restrictions issued by the government due to COVID-19.
The pay out will be “on a par” with the insurance cost of the 11 September terrorists attacks in 2001 and equivalent to all the payouts made for hurricanes Harvey, Irma and Maria in 2017 combined.
According to Lloyd’s, the final bill from the pandemic would likely “be far in excess of those historical events” once “the scale and complexity of the social and economic impact of COVID-19 is fully understood.”
“The global insurance industry is paying out on a very wide range of policies to support businesses and people affected by COVID-19,” John Neal, Lloyd’s chief executive disclosed in a statement.
The abrupt spike in payouts is likely to make Lloyd’s members incur an underwriting loss of $107bn (£87bn). Meanwhile, as stock markets drop, it means that insurers’ investment portfolios have underperformed, leaving them less to fund payouts with and adding to losses.
According to Lloyd’s, the insurance industry could lose a record $200bn this year.
“What makes COVID-19 unique is the not just the devastating continuing human and social impact, but also the economic shock,” Neal said.
“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.”
Neal disclosed that Lloyds would be making charitable donations of £15m to causes linked to the pandemic and had also set aside another £15m “to explore how the industry can create or house structures which support economic recovery and mitigate against future events of this magnitude.”
Founded in 1688, Lloyd’s of London is an insurance and re-insurance marketplace where members meet to price and trade risk. It has waxed stronger over the years.