Lloyd’s chief John Neal has suggested that the coronavirus pandemic is likely to be the most expensive event in history for the insurance industry, including widescale disasters such as Hurricane Katrina and the 9/11 terror attacks. Neal said that the pandemic was the largest insurance challenge ever faced by the industry and that losses of tens of billions, if not hundreds of billions, will be discussed over time.
“The chances of the market making anything other than a notable loss in 2020 are zero,” Neal said in an interview with The Financial Times.
With insurers set to pay out on a wide range of policies, there is a question over the extent to which they will compensate for business interruption, an issue which has led to criticism of the industry in recent weeks. Many insurers have stated that standard policies exclude pandemics, but customers and their lawyers are saying that there are sound reasons to expect a payout.
Neal told The Financial Times that payouts to customers would be higher than the US$50 billion paid over Hurricane Katrina, and that, on top of paying customer claims, insurers are also likely to have to refund some premiums because of the general downturn in business. This follows a call from a group of British lawmakers for car insurers to repay premiums due to the steep drop in car use and claims during to the coronavirus lockdown.