Coronavirus pandemic will cost global insurers $203 billion: Lloyd’s

Insurance losses could rise further if the current coronavirus lockdown continues into another quarter, Lloyd’s of London said. (Reuters)
Updated 14 May 2020

Coronavirus pandemic will cost global insurers $203 billion: Lloyd’s

  • Lloyd’s itself expects to pay out up to $4.3 billion on coronavirus claims
  • Global health crisis on a par with the September 11, 2001 terror attacks

LONDON: The deadly coronavirus pandemic will cost the global insurance industry about $203 billion, the Lloyd’s of London market forecast on Thursday.
Lloyd’s itself expects to pay out up to $4.3 billion on coronavirus claims, putting the global health crisis on a par with the September 11, 2001 terror attacks, it added in a statement.
“The estimated 2020 underwriting losses covered by the industry as a result of COVID-19 are approximately $107 billion, on par with some of the biggest major claims years for the industry,” it said in a statement.
“In addition, unlike other events, the industry will also experience falls in investment portfolios of an estimated $96 billion, bringing the total projected loss to the insurance industry to $203 billion.”
Lloyd’s itself will take a vast hit from the pandemic, which has so far killed almost 300,000 people and infected some 4.3 million worldwide.
“Lloyd’s... today revealed that it will pay out in the range of $3.0 billion to $4.3 billion to its global customers as a result of the far-reaching impacts of COVID-19,” it added in the statement.
“This is on a par with 9/11 in 2001 and the combined impact of hurricanes Harvey, Irma and Maria in 2017, all of which led to similar payouts by the Lloyd’s market.
“These losses could rise further if the current lockdown continues into another quarter.
“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.”
Lloyd’s paid out a total of $4.7 billion for claims arising from the 9/11 terror attacks, while combined payouts for hurricanes Harvey, Irma and Maria stood at $4.8 billion in 2017.
Lloyd’s of London Chief Executive John Neal added on Thursday that COVID-19 would have a “unique” impact on the sector due to its “devastating” economic, human and social cost.
“The global insurance industry is paying out on a very wide range of policies to support businesses and people affected by COVID-19,” Neal said.
“The Lloyd’s market alone is currently expected to pay claims amounting to some $4.3bn, making it one of the market’s largest payouts ever.
“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, but we will keep focused on supporting our customers and continuing to pay claims over the weeks and months ahead.”


Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.

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An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”