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| Lloyd’s of London starts paying out $4.5bn of Harvey and Irma claims | Lloyd’s of London starts paying out $4.5bn of Harvey and Irma claims |
| (about 3 hours later) | |
| Lloyd’s of London, the world’s biggest insurance market, has started paying out the first of $4.5bn (£3.6bn) of claims related to Tropical Storm Harvey and Hurricane Irma, which wreaked havoc in the southern US and the Caribbean. | Lloyd’s of London, the world’s biggest insurance market, has started paying out the first of $4.5bn (£3.6bn) of claims related to Tropical Storm Harvey and Hurricane Irma, which wreaked havoc in the southern US and the Caribbean. |
| Inga Beale, the Lloyd’s of London chief executive, said: “The market is assessing claims and starting to make payments that will help local communities and businesses get back on their feet as quickly as possible.” | Inga Beale, the Lloyd’s of London chief executive, said: “The market is assessing claims and starting to make payments that will help local communities and businesses get back on their feet as quickly as possible.” |
| Catastrophe modelling firms have estimated the insured damage caused by Harvey and Irma at $50bn to $70bn. Hurricane Maria, which has just ripped through Puerto Rico, is estimated to have caused $40bn to $85bn in insured losses. | Catastrophe modelling firms have estimated the insured damage caused by Harvey and Irma at $50bn to $70bn. Hurricane Maria, which has just ripped through Puerto Rico, is estimated to have caused $40bn to $85bn in insured losses. |
| Beale said Lloyd’s was using those estimates to work out its own share of the losses – about $4.5bn for Harvey and Irma. The market is still working out its liability for Hurricane Maria, the earthquake in Mexico and typhoons in Asia. | Beale said Lloyd’s was using those estimates to work out its own share of the losses – about $4.5bn for Harvey and Irma. The market is still working out its liability for Hurricane Maria, the earthquake in Mexico and typhoons in Asia. |
| Analysts at Jefferies estimate a further $1bn hit for Maria and the Mexican earthquake. They expect that Lloyd’s has the capital to absorb these losses without drawing on its central reserves. The cost of property insurance cover in the US is set to rise “materially” as a result, but Asian prices should be unaffected. | |
| Lloyd’s is closely monitoring the impact of climate change. Beale said rising sea levels raised the losses caused by Hurricane Sandy in 2012 by 30%. | Lloyd’s is closely monitoring the impact of climate change. Beale said rising sea levels raised the losses caused by Hurricane Sandy in 2012 by 30%. |
| Another big challenge is Brexit. As part of its planning, Lloyd’s is about to file an application with the Belgian authorities to set up a subsidiary in Brussels. Beale said this was “a bit more complex” for a market with 83 syndicates than it would be for an individual company, but she still expects the new subsidiary to be up and running by the middle of 2018. | Another big challenge is Brexit. As part of its planning, Lloyd’s is about to file an application with the Belgian authorities to set up a subsidiary in Brussels. Beale said this was “a bit more complex” for a market with 83 syndicates than it would be for an individual company, but she still expects the new subsidiary to be up and running by the middle of 2018. |
| Beale welcomed Theresa May’s plan for a two-year transition period. “The transition would be very helpful for the financial services sector,” she said. | Beale welcomed Theresa May’s plan for a two-year transition period. “The transition would be very helpful for the financial services sector,” she said. |
| While the Brussels subsidiary will ensure Lloyd’s can write new business in EU countries after the UK leaves, Beale stressed that it was vital to ensure that insurers can fulfil their liabilities for existing policies, adding that the outlook was “still very uncertain”. | While the Brussels subsidiary will ensure Lloyd’s can write new business in EU countries after the UK leaves, Beale stressed that it was vital to ensure that insurers can fulfil their liabilities for existing policies, adding that the outlook was “still very uncertain”. |
| Lloyd’s has thrown its weight behind proposals for a free trade agreement for financial services that would ensure both UK and EU firms can trade in each other’s countries without tariffs or quotas. | Lloyd’s has thrown its weight behind proposals for a free trade agreement for financial services that would ensure both UK and EU firms can trade in each other’s countries without tariffs or quotas. |
| Beale’s comments came as Lloyd’s reported a pre-tax profit of £1.2bn for the first half of this year, down from £1.46bn a year ago. It excludes the impact of the hurricanes and other recent natural disasters. |