Payouts on pandemic-related disruption are set to hit £6.2bn, insurance market Lloyd’s of London has said. The coronavirus pandemic is the most costly single event in the 335-year history of Lloyd’s, dragging the market to an £887m loss.
The group said it would have made an £800m profit without Covid-19 costs.
Of the £6.2bn in pandemic payouts, £2.6bn was reinsured, reducing the losses suffered by Lloyd’s itself.
The Covid-19 crisis has been more expensive than three disastrous hurricanes in 2017, which cost Lloyd’s $4.8bn (£3.7bn), and the 9/11 attacks in New York, after which Lloyd’s paid out $4.7bn.
The insurance market will be hoping for a sharp drop in claims this year but faces additional costs from the fallout of the Suez Canal blockage.
Cargo owners and businesses are submitting claims for losses occurring after container ship Ever Given ran aground last week. Experts said legal wranglings could easily drag on for five years.
A Supreme Court ruling that insurers must pay out to thousands of companies on their business interruption policies has also been costly for the market.
Insurers had rejected claims for trade lost because of coronavirus shutdowns, saying that it was not covered by the policies. The move left many businesses struggling to survive after being forced to shut during the pandemic.
Judges ruled that lockdown-related losses were covered by many policies. Some small businesses have complained of delays in receiving payouts since the ruling, however. Insurers have also faced spiralling costs from the cancellation of events.
Lloyd’s of London chief executive John Neal said: “Following an extremely challenging year marked by a global health crisis of a scale never seen before, Lloyd’s continued to support its customers with payouts expected to total £6.2bn in Covid-19 claims.
“The year was also marked by a high frequency of natural catastrophe claims and the UK’s formal exit from the EU, driving further losses and uncertainty.
“Against this unprecedented backdrop we have made good progress across our performance, digitalisation, and culture transformation plans.”