As claims payments move beyond the $100 billion mark, COVID-19 is the industry’s “single largest event”.
Lloyd’s of London CEO John Neal has announced that coronavirus insurance payouts will pass the $100 billion mark. This has made the pandemic the “single largest event” the industry has faced in its history.
COVID-19 has had a powerful impact on many industries and insurers have been feeling the pain.
Lloyd’s of London’s estimates now state that the industry will have paid out $100 billion for the claims relating to this catastrophe. This coronavirus insurance payouts figure represents yet another “unprecedented” milestone throughout this global health crisis. Lloyd’s expects that its own figure for claims relating to the pandemic will be around $1.3 billion.
Neal underscored the economic impact on the insurance industry in a recent Yahoo Finance interview. Lloyd’s isn’t specifically an insurer but is rather a marketplace for both insurers and reinsurers with a unique perspective on the size of this risk.
“The economic impact is so significant — the likes of which we’ve never seen in the industry,” stated Neal in the interview “We estimated that the claims payouts will total close to $100 billion, more than [Hurricane] Katrina and more than Harvey and Maria. It’s the single largest event the non-life insurance industry has ever encountered.”
This estimate regarding the coronavirus insurance payouts is certainly reason for insurers feel stressed.
These massive claims payments are arriving at the same time that many of the industry’s top sources of income are plummeting. The stock market has been a rollercoaster, currently facing lows about 30 percent down from where they were three months ago. Moreover, many insurers have been regulated to – or have chosen to of their own accord – allow for late payments or place a moratorium on policy cancellations due to unpaid premiums. Income is way down while payments are exploding.
For Lloyd’s itself, Neal said that the “good” news is that it is braced for the coronavirus insurance payouts. The marketplace is well capitalized, accessibly carrying 200 percent of its payment requirements. “We’ve very comfortable that [our reserves] can fulfill their obligations to customers today,” he said.