BI and other pecuniary losses hammer Lloyd’s as market slumps
Due to the Covid-19 pandemic, Lloyd’s of London has seen underwriting losses rise significantly in 2020, analysis from Insurance DataLab has found.
Losses amounted to more than £2bn in 2020, the research found, some £1.6bn worse than the £0.4bn underwriting loss reported in 2019.
According to Insurance DataLab, the losses were driven by a worsening of underwriting performance in the pecuniary loss market, with the business line falling to a £656.5m underwriting loss for 2020, compared with an underwriting profit of £96.7m the previous year.
The losses coincided with a drop in gross written premiums (GWP) in the sector.
GWP across the pecuniary loss market fell by more than a quarter to £530.2m over 2020, compared to £739.1m in 2019 and £946.3m for 2018.
Insurance DataLab said the tough market conditions also led to a hike in financial and professional liability premiums, with year-on-year price increases in the UK market peaking at 90% in the fourth quarter of 2020 according to the Marsh Global Insurance Market Index.
In each quarter since the start of the pandemic, premiums for financial and professional liability cover have increased 50% year-on-year.
Insurance DataLab found that across the whole of the Lloyd’s market only two business lines achieved underwriting profits for 2020. Motor business reported a profit of more than £42.2m for 2020, up from 2019’s £8.6m, likely aided by the reduction of driving miles during the pandemic.
Meanwhile, marine, aviation and transport business reported underwriting profits of £203.8m, up from an underwriting loss of £48.6m in 2019.
Insurance DataLab co-founder Matt Scott (pictured) said the Lloyd’s market had been hit hard by the 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,” Scott said.
“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.”
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