Lloyd’s of London, the 335-year old insurance market, has reported a loss of £900m for 2020 following a surge in claims due to the coronavirus crisis.
It revealed that gross payouts linked to COVID-19 disruption were expected to have topped £6.2bn for the year as a whole – a record for a single event.
But the market said that £2.6bn of that sum was re-insured and limited the damage.
The previous year had delivered £2.5bn in profits.
Lloyd’s said that the end of the Brexit transition period added to its woes as trade was disrupted by new rules and the pandemic
The market was not immune to the effects on its staff either – with employees being asked to work from home during lockdowns though its underwriting room was certified as a coronavirus-secure environment and was open for market participants.
Lloyd’s said 2020 marked an “unprecedented” year and it would have delivered an underwriting profit of £800m when the effects of the pandemic were excluded, despite further pressures from Brexit and natural disasters.
More details on the scale of the hits were expected to be released later though COVID easily proved the most costly single event.
It had warned, in the early days of the pandemic, that nearly a third of the claims it was facing at the time were for the postponement or cancellation of major events – with others covering areas such as property insurance and trade credit.
The update, delivered in May 2020, had forecast payouts of up to £3.5bn assuming it was all over by the end of June.
The crisis also left the sector nursing a bloody nose after it took a Supreme Court ruling to force insurers, including a number linked to the Lloyd’s market, to pay out on disputed business interruption policies.
Lloyd’s has previously said it could take years for the true cost of the pandemic to become clear.
But it said that when COVID was stripped out, the results demonstrated a “significant improvement” in its underlying performance.
A 1% fall in gross written premiums to £35.5bn was offset by premium rate increases of 10.8%.
Lloyd’s said that the positive rate momentum had continued during the current first quarter of 2021.
Its results statement also claimed to have made “good progress” in turning around its culture after a report two years ago described a deep-seated culture of sexual harassment at the centuries-old institution.
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 pay outs expected to total £6.2bn in COVID19 claims.
CEO of Lloyd’s of London John Neal
“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.
“Our disciplined underwriting approach and determination to become the world’s most advanced insurance marketplace have set us up for real success this year alongside the continued positive rate momentum that will see the market supporting growth for the first time in four years.”