’Financial pressures will continue to affect businesses’ as economies emerge from the pandemic - Insurance DataLab
The Covid-19 pandemic has driven underwriting losses of more than £2bn in the Lloyd’s market for 2020, according to analysis from benchmarking platform Insurance DataLab.
Insurance DataLab co-founder Matt Scott said: “The Lloyd’s market has been hit hard by the Covid-19 pandemic, with business interruption and other pecuniary loss claims more than quadrupling over the last 12 months.
“The sector has already pushed through price increases, particularly towards the end of 2020, but more will be needed to offset the losses already experienced by the market to date.”
Further financial pressures on insurance customers could mean that commercial underwriters face tough times ahead.
Meanwhile, these underwriting losses also coincide with a drop in gross written premium across the sector.
GWP in the financial loss market fell by more than a quarter to £530.2m over 2020, compared to £739.1m in 2019 and £946.3m for 2018.
Tough market conditions have led to a hike in financial and professional (FinPro) liability premiums, with year-on-year price increases in the UK market peaking at 90% during the fourth quarter of 2020, according to the Marsh Global Insurance Market Index, last published in July 2021.
Scott added: “Financial pressures will continue to affect businesses as the world’s economies continue to emerge from the pandemic and insurers must brace themselves for further failures among its customer base, which will only add further downward pressure on an already shrinking premium base.”
Across the whole of the Lloyd’s market, only two business lines achieved underwriting profits for 2020. This is in spite of the fact that premiums have increased by more than 50% year-on-year in every quarter since the start of the pandemic.
Insurance DataLab is a new data insight service, focusing on the performance of insurers, Lloyd’s syndicates, MGAs and brokers based in the UK and Gibraltar.