Lloyd’s of London Backs State-Backed Pandemic Insurance Fund

Lloyd’s of London, the world’s largest insurance market, called for the creation of a government-backed fund to cover the cost of claims in the event of future pandemics.

The firm is committing 15 million pounds ($18.5 million) of seed capital to explore long-term solutions even as insurers are being hit hard by the coronavirus outbreak, Chairman Bruce Carnegie-Brown said at a City & Financial Global event on Thursday. That includes support for a strategy, dubbed Pandemic Re, that would be similar to an existing financing mechanism set up to backstop the insurance industry in case of a flood of claims following a major terrorist attack.

“We are in active discussion with the Treasury and industry participants to develop solutions made all the more urgent by the thought that Covid-19 could re-emerge quite quickly in a second wave,” Carnegie-Brown said.

Insurers are facing soaring claims at the same time as the value of their investments falls amid the outbreak. Allianz SE, Europe’s largest insurer, scrapped its targets last week, with Chief Executive Officer Oliver Baete comparing the effect of the pandemic to a meteorite striking the industry. Swiss Re AG has called for governments to backstop potential industry losses.

Pool RE, which was set up as a rainy-day fund for future terrorist attacks in the 1990s, is advising an insurance industry steering group with members including Aviva Plc CEO Maurice Tulloch and RSA Insurance Group Plc CEO Stephen Hester.

To contact the reporters on this story:
Lucca de Paoli in London at gdepaoli1@bloomberg.net;
Benjamin Robertson in London at brobertson29@bloomberg.net

To contact the editors responsible for this story:
Shelley Robinson at ssmith118@bloomberg.net

Patrick Henry, Keith Campbell

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