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LLOYD’S PRESENTS SOLUTIONS customers, without requiring any government support. Recover Re sets out a proposed ‘after the event’ insurance product framework, that could provide immediate relief and cover for non-damage business interruption over the long-term, including the current COVID-19 pandemic. If implemented, this could be an efficient way to inject commercial and government funds into the economy, providing relief to customers with limited borrowing capacity. This framework could be implemented in any country where the government has the resources and industry commitment to support it. Black Swan Re is a reinsurance framework for government and industry partnership that could better protect customers from the devastating and long-term impacts of systemic catastrophic events – from another pandemic, or global supply chain disruption, to the interruption of critical infrastructure or utilities. The framework would www.chart-exchange.com
provide reinsurance for commercial non-damage business interruption cover for black swan events through industry pooled capital, backed by a government guarantee to pay out if ever the pool had insufficient funds. Alongside developing and sharing these frameworks, Lloyd’s is developing a Centre of Excellence supported by up to £15m in seed capital investment. The Centre will build resource and capability to better understand, model and create products that better protect customers against systemic risks, including pandemics. This will include new technical capabilities and services to support insurers, and academic partnerships to develop a better understanding of systemic risks and customers' emerging needs from the insurance industry.
These Lloyd’s proposals show what a positive role our industry could play as society rebuilds and recovers. We recognize that most of these proposals will need governmental support in each country to turn these good intentions into the practical solutions.” To kickstart the creation of the Centre of Excellence, Lloyd’s Innovation Lab is already working with insurtechs that can provide some of these TABLE OF CONTENTS
capabilities, including exploring the application of an epidemic tracker to better evaluate and underwrite pandemic risk, as well as solutions to help close the insurance gap for systemic risks. In parallel, Lloyd’s Product Innovation Facility is focusing on innovating products to respond to an accelerated shift towards intangible-driven business models in response to COVID-19. Lloyd’s Chairman, Bruce CarnegieBrown, said: “The purpose of insurance is to help businesses and communities manage the risks they face, enable them to recover quickly from disasters by paying claims, and provide the security that allows them to innovate, develop and drive economic growth. COVID-19 has demonstrated that there is much more we can do to support our customers by providing protection for the changing risks they face. Some of these risks are of a scale that require partnership with governments globally and this report identifies ways in which the insurance industry could work with governments to share risk and create a braver, more resilient world.” Andrew Brooks, CEO of Ascot Group, said: “Now is the time for the insurance sector to step up and demonstrate its value to society. The proposals in this paper give us a target to aim at and will kickstart our industry’s response to the challenge
See Lloyd’s Solutions Pg 52 JULY 2020
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