Lloyd's CEO, John Neal, published today the following to the market:
In response to the COVID-19 outbreak, Lloyd’s Executive Committee is now meeting on a daily basis to ensure we can respond quickly but also be proactive in the context of fast-moving and unprecedented events.
As well as dealing with the issues of the day, we will be agreeing actions pertaining to our people, customers and the market, as well as government, regulators and other stakeholders. The purpose of this note is to update you on our discussions to date, and I will continue to keep you updated as the situation develops.
Supporting our customers
Yesterday I joined a call with the UK’s City Minister, John Glen, and other leaders from the insurance sector to discuss how the industry is responding to the COVID-19 outbreak. You may have seen the Chancellor of the Exchequer speaking in Parliament later in the day about the commitment made by insurers to pay out on valid claims for business interruption where there is either a specific notifiable disease or pandemic extension, or denial of access cover. We were clear that this is the position of the Lloyd’s market. Our reputation for paying all valid claims goes to the heart of Lloyd’s brand, and it is important that we provide this clarity to our customers.
Supporting the Lloyd’s market
Last Friday Lloyd’s closed the Underwriting Room to test that the market could trade electronically via PPL or the emergency trading protocols. I am pleased to say that this test of the market’s resilience went well and should provide confidence in our collective ability to trade electronically.
To date, Lloyd’s Underwriting Room has remained open for business. On a typical day we see a footfall of around 5,000 per day, however this fell to 1,000 on Monday and under 200 today. Given that most insurance firms have put in place remote working, coupled with the advice from the UK government to avoid non-essential contact, Lloyd’s Executive Committee has today decided to close the Underwriting Room with effect from 16:00 on Thursday 19 March 2020. We have taken this decision with a heavy heart and a commitment to review the situation on a weekly basis. The Lloyd’s building at One Lime Street will remain open for tenants, though this may change in the future.
On Monday this week, the Performance Management team wrote to all managing agents requesting they complete a market return, outlining their expected exposures as a result of the COVID-19 outbreak. We realise the situation is complex and fast-changing and will be working with you to collect the best quality insight we can.
We are in regular contact with the PRA and FCA, as well as overseas regulators, and are working to co-ordinate regulatory requests and avoid duplication. We are also reviewing market return requirements for Q1 with a view to simplifying back to core requests only where we can.
2019 financial results
Next Thursday 26 March, we will be publishing the 2019 financial results for the Lloyd’s market. Instead of our usual market meeting, you are invited to join us online to hear details of the market’s results and insights from myself, Jon Hancock and Burkhard Keese.
Over the next few weeks we will all be learning to work in very different ways, and I very much welcome your feedback on what works well and what works less well so we can build this insight into the Future at Lloyd’s.
Thank you again for your support."
Click here to see Lloyd's communication to managing agents requesting returns to gain an understanding of the potential Coronavirus losses and exposures today, and also an estimate of the ultimate potential losses. "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."
Click here to see Lloyd's emergency trading protocols which ensure that ensure that all necessary (re)insurance and can continue to be placed (or existing cover extended); and time critical aspects of claims handling and determination can be undertaken remotely.
The Lloyd's Market Association has produced a limited extension wording for Lloyd's policies which in certain circumstances enables automatic renewal. Assuming Lloyd's emergency trading protocols function smoothly then this extension clause will not be required.