The boss of Lloyd’s of London has called for the Government and insurers to sit down “very quickly” to find a way to deal with pandemic-related losses ahead of possible rolling lockdowns next year.
John Neal, chief executive of London’s 332-year-old insurance market, said he was “frustrated” that more progress had not been made on forming a partnership between insurers and the Government to cover further losses likely to be suffered by businesses in the coming months.
Insurers suffered a backlash during the first lockdown as they refused to pay out on most claims by businesses forced to shut because of the pandemic.
Industry figures argue that losses from pandemics are too big for the private market to cover alone. In July, Lloyd’s proposed creating “Recover Re”, a vehicle that would cover losses caused by events such as the Covid pandemic through a combination of private and public funds. Government-backed schemes Pool Re and Flood Re already cover terrorism and flooding risks.
Mr Neal said: “If it is going to be a long-term 2021 – in and out of lockdown – then frankly, we need to be sat down very, very quickly to ensure Recover Re or something equivalent can be put in place. I’m not blaming the Government – they’ve got stacks on their plate – but I feel gently frustrated that what was a good idea couldn’t be put in place because that would have actually had a benefit during this second lockdown.”
Most businesses do not have cover for the pandemic so are relying entirely on Government support, he said.
Lloyd’s announced plans on Thursday to cut £800m in costs for its underwriters and brokers by increasing automation.