Lloyd’s, the world’s largest insurance market, said that the coronavirus crisis will cost it as much as the September 11 attacks, or all the hurricanes of 2017 combined.
The insurance giant will pay out between three billion and 4.3 billion US dollars (£2.5 billion to £3.5 billion) to cover its customers around the world, it revealed on Thursday.
But it also warned that losses could rise further if the lockdown continues into another quarter, and added that the crisis was likely to become much more expensive than the hurricanes and 9/11.
“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,” the London-based insurance market said.
The hurricanes and 9/11 were both geographically contained events, while Covid-19 has hit the entire planet, Lloyd’s said.
Chief executive John Neal said that the insurers are facing one of their biggest challenges in history.
“The global insurance industry is paying out on a very wide range of policies to support businesses and people affected by Covid-19,” he said.
“The Lloyd’s market alone is currently expected to pay claims amounting to some 4.3 billion dollars, making it one of the market’s largest payouts ever.”
He added: “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.”
Around 15% of the payout is expected to go to UK customers. European customers will get around 7%, those classed as being in the “US and worldwide” will be paid 58%, and the rest of the world will get 10% of the payouts.
Three years ago some of the most devastating hurricanes in history ripped through the Caribbean.
At the time, Lloyd’s paid out 4.8 billion dollars (£3.9 billion).
After 9/11 it paid out 4.7 billion dollars (£3.8 billion).
Lloyd’s said that its estimates for the pandemic assume that social distancing and lockdown continues in some form through 2020. It also took into account forecasts of major declined in global Gross Domestic Product (GDP).