Lloyd’s of London’s insurance market fell to £ 900m last year after paying £ 6.2bn in Covid 19 claims, but CEO John Neal said he had to ” learn the lessons ”from the controversy over its payment failure in the event of numerous business interruptions. Strategies.
Lloyd’s insurers such as Hiscox have received a flood of complaints from companies that they refuse to pay for business interruption coverage during the months they have been forced to close due to the pandemic.
A Supreme Court judgment requested by the Financial Conduct Authority ultimately ruled that in many cases insurers had to pay and the case caused very bad publicity in the market.
Lloyd’s chief John Neal said there were “lessons to be learned” from the scandal for the market.
When asked what he thought of Lloyd’s insurers like Hiscox being in such a fiasco, he replied, “Not good. The reputation of the industry has been damaged. When the regulator takes the insurance industry to court, it is not a good idea. “
He pointed out that most of the disputed policies were written outside Lloyd’s by companies like Hiscox’s in-house insurance operations. “But because Hiscox is a big name at Lloyd’s, everyone assumes it’s Lloyd’s politics that is the problem when it’s not.
“Nonetheless, we cannot have a situation where Lloyd’s stands up and says we have paid £ 6bn in Covid claims and our customers are still disillusioned.”
He said the situation was “a real wake-up call” and policies needed to be clarified in the future, citing the example of a friend with a 140-page agriculture and land policy. “It’s just not good,” he said.
The industry had been working on a draft simplified business interruption insurance policy to clarify what was and was not covered for both parties. “We have to make sure we don’t find ourselves in this situation again. We have a strong societal UKTN; we are here to protect people at critical times. “
He added that the losses in the market due to the blockade of the Suez Canal by the cargo ship Ever Given would run into “hundreds of millions” and that the claims were easier to process than Covid. “It’s the very kind of loss we’re used to,” he said. “This will be a fairly significant maritime claim, but not particularly out of the ordinary.”
Of the £ 6.2 billion the Lloyd’s market is paying for Covid-19, like the canceled Wimbledon tennis tournament and the Olympics, much of it was covered by reinsurance – which insurers insure. The net loss to the market from the pandemic is therefore £ 3.4 billion.
This added 13.3% to the market loss ratio, making it 110.3%.
Premiums rose sharply over the year, with policy prices up 10.8% and “positive rate dynamics” in 2021.
Neal stressed that there were a large number of natural disaster and Brexit claims, which had also resulted in “further losses and uncertainty”.
Neal said the market would reopen after Covid in mid-April for those who wish to return with a full underwriting room reopening on May 17.
The building has six entry and exit points and a full selection of brokers and underwriters.
This makes social distancing relatively easy, allowing it to cope with an ample 50% occupancy rate, he said. The market has 300 brokerage firms and 100 insurers and most said their staff would return more than three days a week – more than the city average.
Neal said Lloyd’s was set to “tear up” the interior of the market building to medernize it for decades to come with plans likely to be ready in May.