Insurance marketplace Lloyd’s of London said on Thursday that it expected to shell out as much as £5bn ($6.5bn) to cover claims related to the coronavirus pandemic.
The figure is a marked increase from the marketplace’s previous estimate of between £2.4bn and £3.5bn, which would already have put total claims on a level similar to those experienced after the 9/11 attacks.
The pandemic has pushed up losses at insurance firms globally, with restrictions and knock-on effects prompting across-the-board claims for business closures in particular.
Lloyd’s had previously said that payouts would be on par with those paid after 11 September, 2001 and the combined impact of the 2017 Atlantic hurricane season, when it dolled out billions in insurance claims.
But, unlike the coronavirus pandemic, claims resulting from both of those events were generally limited to one geographic area.
The imposition of new restrictions or a punishing second wave of the virus could push up claims even further.
The expected claims pushed the City of London institution to a £400m loss in the first half of its current financial year.
After the money recovered on reinsurance contracts is taken into account, the total paid out thus far by Lloyd’s for claims related to the pandemic has hit £2.4bn.
Lloyd’s said on Thursday that some £2bn of the expected £5bn in claims will be protected by similar reinsurance contracts, taking its net payout down considerably.
READ MORE: COVID-19 costs Morrisons £155m
Excluding coronavirus-related losses, the marketplace said it posted an underwriting profit of £1bn during the period, calling it a “significant improvement” in its underlying performance.
The institution’s closely watched combined ratio figure, which measures the profitability of its daily operations, also improved significantly — falling to 91.7% from 98.8% in the same period last year when pandemic-related claims are put aside.
“The first half of 2020 has been an exceptionally challenging period for our people, our customers, and for economies around the world,” said John Neil, the chief executive of Lloyd’s.
“The pandemic has inflicted catastrophic societal and economic damage calling for unparalleled measures to stifle the spread of the virus, and to get businesses and economies back on their feet.”