Virus insurance losses to top US$107 billion

Global insurance losses from the Covid-19 pandemic will be higher this year than the US$107 billion Lloyd's of London had previously estimated, its chairman Bruce Carnegie-Brown has said.

Carnegie-Brown told the Reuters Events Future of Insurance USA conference that pandemic-induced losses will be on a par with 2017, when three Atlantic hurricanes contributed to a catastrophe bill of US$144 billion, the highest on record according to Swiss Re.

Lloyd's, which in March shut its underwriting room for the first time since World War II due to a UK government lockdown, said Lloyd's firms were facing claims from 16 different business lines.

“Unlike many events, a pandemic is everywhere at the same time,” Carnegie-Brown said, adding that the outbreak had extended longer than expected. The 330-year-old Lloyd's operates a commercial insurance marketplace, insuring anything from oil rigs to footballers' legs. It has said it will pay 2.4 billion pounds (US$3.2 billion) in pandemic-related claims for the first six months of 2020.

Lloyd's has proposed a “Black Swan” reinsurance scheme to governments globally to ensure better cover during circumstances such as the pandemic and other disturbances to business, but Carnegie-Brown said it was hard to get government attention on the topic so far.

“The challenge for governments of course is that they are very short-term focused... (it is) very difficult for them to lift their heads above the parapet and think about the future,” Carnegie-Brown said.

Cyber exposure remained the biggest risk faced by insurers, he added, echoing comments made earlier this week by insurance broker and consulting firm Marsh & McLennan.

“As a world, we need to look at our resilience to cyber risk exposures.”

– Nampa/Reuters

Noor Zainab Hussain and Carolyn Cohn -