The deadly coronavirus pandemic will cost the global insurance industry about US$203 billion, the Lloyd’s of London market forecast on Thursday.
Lloyd’s itself expects to pay out up to $4.3 billion on coronavirus claims, putting the global health crisis on a par with the September 11, 2001, terror attacks, it added in a statement.
“The estimated 2020 underwriting losses covered by the industry as a result of Covid-19 are approximately $107 billion, on par with some of the biggest major claims years for the industry,” it said in a statement.
“In addition, unlike other events, the industry will also experience falls in investment portfolios of an estimated $96 billion, bringing the total projected loss to the insurance industry to $203 billion.”
Lloyd’s itself will take a vast hit from the pandemic, which has so far killed almost 300,000 people and infected some 4.3 million worldwide.
“Lloyd’s … today revealed that it will pay out in the range of $3.0 billion to $4.3 billion to its global customers as a result of the far-reaching impacts of Covid-19,” it added in the statement.
“This is on a par with 9/11 in 2001 and the combined impact of hurricanes Harvey, Irma and Maria in 2017, all of which led to similar payouts by the Lloyd’s market. These losses could rise further if the current lockdown continues into another quarter.
“Lloyd’s believes that once the scale and complexity of the social and economic impact of Covid-19 is fully understood, the overall cost to the global insurance non-life industry is likely to be far in excess of those historical events.”
Lloyd’s paid out a total of $4.7 billion for claims arising from the 9/11 terror attacks, while combined payouts for hurricanes Harvey, Irma and Maria stood at $4.8 billion in 2017.
Lloyd’s of London Chief Executive John Neal added on Thursday that Covid-19 would have a “unique” impact on the sector due to its “devastating” economic, human and social cost.
“The global insurance industry is paying out on a very wide range of policies to support businesses and people affected by Covid-19,” Neal said.
“The Lloyd’s market alone is currently expected to pay claims amounting to some $4.3bn, making it one of the market’s largest payouts ever.
“What makes Covid-19 unique is not just the devastating continuing human and social impact, but also the economic shock.
“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.”