COVID-19 outbreak – request for market return
Lloyd’s continues to monitor the COVID-19 outbreak closely, in the context of both operational resilience and the expected financial impacts on the market.
Turning first to operational resilience, we have put in place a number of measures to provide confidence for the market and our customers that Lloyd’s is, and will continue to be, open for business. These include provision of emergency trading protocols, as well as a test of market resilience in the event of the closure of Lloyd’s Underwriting Room.
We recognise that assessing potential market losses is difficult. The situation is fast moving and changing daily, leading to a high degree of uncertainty about the eventual type and scale of losses that may emerge. We have therefore mobilised our Catastrophe Response Group to co-ordinate Lloyd’s response across the market and Corporation, using what we have learned from previous natural catastrophes.
Lloyd’s is also working closely with our UK regulators – the PRA and FCA – as well as regulators overseas. Wherever possible, we aim to co-ordinate our response to reduce the regulatory overhead on managing agents.
We are now at a point where we need to begin to understand the potential losses that COVID-19 could bring to the Lloyd’s market, and to this end we require all managing agents to complete a return. Recognising the difficulty in doing this in the midst of an evolving event, we have split the request into 2 sections:
A – understanding the potential losses and exposures today, and
B – an estimate of the ultimate potential losses.
Given that the future is uncertain we would like to understand the assumptions you are making in how the event unfolds. There are also a short number of qualitative questions. Today we will be writing to the Active Underwriter in your firm, as well as the Exposure Management team, with full details of the return.
We expect the loss estimates to move over time as the situation and our understanding develops, so will ask for the same return in one month and continue to review the frequency of return that is needed.
For further information on the return, please contact Kirsten Mitchell Wallace, Head of Risk Aggregation (Kirsten.Mitchell-Wallace@lloyds.com). To discuss other insurance implications, please contact Caroline Dunn, Head of Underwriting (Caroline.Dunn@lloyds.com).
Thank you for your continued support.