Lloyd’s calls for state-backed ‘Black Swan’ reinsurance
LONDON (UK) – Lloyd’s of London has said “Black Swan” reinsurance schemes supported by governments could help businesses get insurance pay-outs after huge shocks.
It said that insurers worldwide will pay out more than $100 billion in coronavirus-related claims this year.
But many firms are worried that their business interruption policies do not cover the pandemic and some in Europe and the United States are in dispute with insurers.
Lloyd’s said on Wednesday the Black Swan cover could be used to ensure payments after catastrophes such as a cyber attack or solar storm destroying infrastructure, as well as for pandemic.
“Our concern is you solve for pandemic and you don’t solve for the next disaster,” Lloyd’s Chief Executive John Neal told Reuters.
Insurers in the UK, France, Germany and the US are seeking government-backed “Pandemic Re” cover for future pandemics.
Neal said that unlike a Pandemic Re, a Black Swan Re would help firms after “multiple systemic exposures”. European risk managers have also called for a broader programme.
Lloyd’s has set up a 15 million pound ($18.5 million) seed fund to create new products. It is also proposing a government-backed after-the-event product to give small businesses a quick cash injection after a crisis.
And the market is working on a new business interruption policy for its small business customers, to insure amounts of up to 100,000 pounds, which Neal said could launch this year.
(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field