Our response to COVID-19
While our primary duty as an industry and as a market is to pay our customers’ claims, these are unprecedented times which call for a more concerted market response.
On 1 July 2020, we published a report entitled Supporting global recovery and resilience for customers and economies: the insurance response to COVID-19, together with a supplementary document, Open source frameworks for systemic risk.
The Report sets out three proposed ‘open source’ frameworks that are freely available for application around the world, two of which require government and (re)insurance industry partnerships. If implemented, these three frameworks could provide customer protection for further waves of COVID-19 and other future pandemics, as well as strengthening societal resilience against future systemic catastrophic events.
Report: Supporting global recovery and resilience for customers and economies
Proposals to protect the global economic recovery
On 12 October 2020, we published our second report in our ‘The insurance industry response to COVID-19’ series, Building simpler insurance products to better protect customers.
Insurance plays an essential role globally for society – by providing financial relief to customers during challenging times, it helps people, businesses and economies recover from unexpected disasters. For many, this worked as intended during the COVID-19 pandemic. However, in some instances there has been confusion.
The recommendations set out in our second report address the urgency with which the global insurance industry must invest and focus on clarifying and simplifying its products. Doing so will mean customers have improved understanding of the cover they have in place and the most relevant protection for the risks they face. While product complexity presents a challenge for all customers, the need is particularly pressing for small to medium-size enterprise (SME) customers, who make up a substantial proportion of insurance policies sold globally but who typically have significantly less access and resource dedicated to risk management than larger corporate firms.
As the COVID-19 pandemic continues to devastate economies and communities, and with impacts requiring resources that can only be accessed by governments, both reports seek to present potential solutions to address the many complex challenges ahead.
Report: Building simpler insurance products to better protect customers
The recommendations set out in our second report address the urgency with which the global insurance industry must invest and focus on simplifying products.
Centre of Excellence
Alongside developing and sharing these frameworks, we are developing a Centre of Excellence supported by up to £15m in seed capital investment. The Centre will build resource and capability to better understand, model and create products that better protect customers against systemic risks, including pandemics. This will include new technical capabilities and services to support insurers, as well as academic partnerships to develop a better understanding of systemic risks and customers' emerging needs from the insurance industry.
To kickstart the creation of the Centre of Excellence, the Lloyd’s Innovation Lab is already working with insurtechs that can provide some of these capabilities, including exploring the application of an epidemic tracker to better evaluate and underwrite pandemic risk and solutions to help close the insurance gap for systemic risks. Alongside this, our Product Innovation Facility is focusing on innovating products to respond to an accelerated shift towards intangible-driven business models in response to COVID-19.
In addition to the above, the Corporation will donate £15m to a number of charities concerned with healthcare, wellbeing and innovation and the Lloyd’s market has already started creating new policies to support the immediate health response as well as the longer-term exit strategy including the search for diagnostics, treatments and vaccinations. One syndicate alone is insuring more than 100 individual clinical trials taking place around the world investigating all stages of COVID-19.
By working together, we have the best chance of putting in place the most effective and successful initiatives, and representing the very best of our industry.