Insurance market Lloyd’s of London today said it expected to pay out $3bn-to-$4.3bn (£2.5bn-to-£3.5bn) in claims stemming from the coronavirus pandemic.
This is on par with the September 11 attacks in 2001 and to the combined impacts of hurricanes Harvey, Irma and Maria in 2017.
Lloyd’s said the overall cost to the global insurance industry is “likely to be far in excess of those historical events”.
The insurance market said losses could rise further if the lockdown continues into another quarter.
Lloyd’s estimated underwriting loss to the global industry of $107bn, on par with big payouts in 2005 and 2007 for major hurricanes.
“Importantly, these natural catastrophes were geographically contained events, occurring over the course of hours and days – vastly different in nature to the global, systemic and longer-term impact of covid-19,” Lloyd’s said.
Additionally, the industry will also suffer falls in investment portfolios of an estimated $96bn, bringing the total projected loss to the insurance industry to $203bn, Lloyd’s said.
John Neal, chief executive of Lloyd’s, said: “The global insurance industry is paying out on a very wide range of policies to support businesses and people affected by covid-19.
“The Lloyd’s market alone is currently expected to pay claims amounting to some $4.3bn, making it one of the market’s largest pay-outs ever. What makes COVID-19 unique is the 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.”
Lloyd’s said it was working on initiatives to help the industry through the crisis, including establishing a ‘Recover Re’ insurance vehicle offering “after the event” cover for pandemic related business recovery, including the current covid-19 pandemic.
Neal also said Lloyd’s had donated £15m to charities and set aside £15m in seed capital to “explore how the industry can create or house structures which support economic recovery and mitigate against future events of this magnitude.
The insurance industry has been in the spotlight in recent weeks after angry policyholders began agitating for business interruption insurance payouts.
Numerous groups of policyholders have banded together to sue insurers who have not paid out on policies.