The COVID-19 pandemic presents one of the most unprecedented challenges the Lloyd’s and wider London Market have faced.
The industry’s pandemic-related insured losses are expected to reach $107 billion in 20201 and Lloyd’s expects to pay between $3 billion and $4.3 billion (£2.5 billion to £3.5 billion) in insurance claims related to COVID-19. (This is comparable to the $4.7 billion in claims following the 9/11 terrorist attacks and the $4.8 billion relating to hurricanes Harvey, Irma, and Maria of 2017.2)
Despite the challenges, though, the pandemic has also kickstarted operational and societal changes that have showcased that the market can adapt to a more digital environment.
Back in March, Lloyd’s of London closed its underwriting room for the first time in its 330-year history in response to the COVID-19 outbreak.3 A traditionally face-to-face market has had to turn entirely digital almost seemingly overnight, and has prioritised many of its planned digital enhancements – part of its Blueprint One strategy – which includes improving electronic placement, delegated authority services, and claims processes.4
The underwriting room at Lloyd’s is scheduled to reopen in September, albeit with capacity reduced to 45 percent to ensure social distancing, and a planned “virtual underwriting room” to allow brokers and underwriter to connect and trade.5
In the interests of ensuring business continuity, Verisk provides the Lloyd’s and London Market with various tools and software that make working remotely much more efficient. This includes underwriting tools that help insurers prefill policyholder details and make faster decisions and claims adjustment and management tools that help validate information and detect potential fraud. Verisk also provides other digital solutions and platforms, including MDC (Market Data Collection), that helps you better manage your time by cutting out unnecessary processes and costs.
View many of the products we offer to the London Market on our newly launched webpage.
What has changed?
The impact of COVID-19 was almost immediate on insurance services that typically require on-site visits, such as underwriting inspection and claims adjustment.
Verisk’s claims handling systems help to illustrate the scale of change, with the average time to contact a policyholder jumping from 2.7 days before COVID-19 to 4.2 days after quarantine measures were introduced.6
Contact could be either on site or over the phone depending on the insurance company and the size of the loss. Prior to the pandemic this was mostly on site and took much longer because both policyholders and adjusters were struggling to figure out how to safely do an onsite inspection.
By comparison, the hurricane season of 2017 resulted in four major hurricanes striking the Caribbean islands in the space of 45 days. More than 1 million cars were flooded along the U.S. Gulf Coast alone, which is roughly 38 percent of all cars registered in London. During this time, the average time to contact a policyholder in the affected regions only raised from 2.9 days to 3.2 days.7
Verisk has long been an advocate of more collaboration with the policyholder via solutions that take advantage of video and other digital communications tools. Since quarantine rules took effect, more than 30,000 users across 1,100 customers have collaborated using Verisk’s solutions. From 14 March to 31 May 31, they participated in 190,000 collaborations, 80,000 videos, and 2.2 million photos.8
Data, models, platforms, and solutions that aid remote underwriting and claims handling are becoming increasingly important. Verisk offers prefill solutions such as its U.S. Property Data, that allow you to gain almost instant access to verified, reliable data on millions of properties across the United States to support your underwriting decisions.
Mozart Form Composer can help you better manage pandemic exclusions, errors and omissions (E&O) exposures, and other policy wording challenges through the use of AI, natural language processing, and cloud computing.
Through the claims-handling tool ClaimXperience, Verisk allows policyholders to provide their own videos and imagery to support any claims they make. This collaboration between policyholder and insurer adds another layer to the claim adjustment process that can help expedite the settlement of a claim and get the policyholder up and running as quickly as possible.
What does the future hold?
For further insight into what the future of the market will look like, Verisk and a panel of experts from key associations shared their views in our Verisk Vision session, ‘A Post-Pandemic London Market’, where panellists discussed what the “new normal” for the Lloyd’s and London Market may look like, and what may separate the “winners” from the “losers”.
Panellists argued there may be a rise in the use of exclusionary language – particularly around business interruption in the context of the pandemic – and much more precision around wordings. They suggested that communicating policy terms clearly, enhancing customer service, and ensuring claims are paid quickly and efficiently will be critical to helping insurers maintain and improve their reputations.
A healthy and vibrant insurance industry will be key to helping individuals and businesses alike navigate the uncertain times ahead.
For more information on how Verisk supports the Lloyd’s and London Market, visit our new London Market webpage.
- ‘Lloyd's of London expects COVID-19 claims to match 9/11’, Carolyn Cohn, Reuters, <https://uk.reuters.com/article/us-health-coronavirus-lloyd-s-of-london/lloyds-of-london-expects-covid-19-claims-to-match-9-11-idUKKBN22Q0MT>, accessed 27th July, 2020
- Coronavirus: Lloyd’s of London to close underwriting room from today, James Booth, City AM, <https://www.cityam.com/coronavirus-lloyds-of-london-to-close-underwriting-room-from-today/>, accessed 27th July, 2020
- Blueprint One Update, Lloyd’s, <https://futureat.lloyds.com/blueprint-one/blueprint-one-update/>, accessed 27th July, 2020
- Lloyd's of London insurers map out new look for September re-opening, Reuters, <https://uk.reuters.com/article/uk-health-coronavirus-lloyd-s-of-london/lloyds-of-london-insurers-map-out-new-look-for-september-re-opening-idUKKBN23O34A>, accessed 27th July, 2020
- The Rise of the Insurance Ecosystem, Mark Anquillare, Verisk Vision Opening Keynote, <https://www.verisk.com/insurance/verisk-vision-2020/sessions/opening-keynote/>, accessed 27th July, 2020