Lloyd’s of London chairman on Covid: We don’t know when it will end
The insurance bill for Covid-19 is spiralling with Lloyds of London today revealing it expects to hand out £5 billion to clients whose business has been whacked by the virus.
While some insurers are fighting claims relating to Covid, insisting it is not covered by many policies, Lloyds today gave a serious indication of the scope of the cost to the industry.
In the first six months of the year Lloyds – a syndicate of 90 members – paid £2.4 billion in coronavirus claims. That led it to a loss of £400 million compared to a £2.3 billion profit last time.
The market, based on Lime Street at the heart of the City is the hub of the world’s face to face insurance broking trade. It earlier estimated that the global cost to non-life insurers from Covid would be $100 billion (£80 billion) in pay outs for lost business.
John Neal, Lloyd’s CEO said: ” The pandemic has inflicted catastrophic societal and economic damage calling for unparalleled measures to stifle the spread of the virus, and to get businesses and economies back on their feet.”
Losses due to the pandemic could stretch into future years, said chairman Bruce Carnegie-Brown. “Nobody knows when it started, we certainly don’t know when it’s going to end.”
Neal insists Lloyd’s is comfortably strong enough to withstand the crisis. But Covid-19 is not the only headwind insurers face.
The blast in Beirut will cost hundreds of millions, while other claims related to climate change are likely to start rolling in. The hurricane season also struck early this year.
Swiss Re AG earlier this week posted a surprise $1.1 billion first half loss as it set aside money to cover future losses related to the pandemic. Munich Re also took an e1.5 billion first-half hit and said it faced claims of at least 100 million euros related to the Beirut blast.
Lloyd’s combined ratio, a measure of profitability, stands at 110%. That means for every £100 taken in premiums it is paying out £110.
Neal added: “Our half year results demonstrate that our robust approach to performance management and remediation has begun to take effect, evidenced by a significant turnaround in the underlying performance metrics, which give the truest indication of our market’s profitability.”
Lloyds saw written premiums rise by 1.7% to £20 billion. Lloyd’s reopened its underwriting floor last week after nearly six months of closure.