Lloyd’s of London, the insurance market, is expecting thousands of people to be back on the floor of its underwriting room by the end of next month.
Lloyd’s is one of the last face-to-face financial markets in the City of London, with brokers and underwriters meeting to discuss commercial insurance policies on everything from property to cyber attacks. It closed in March as the lockdown started, and reopened them only last week.
Chief executive John Neal told the Financial Times that the reopening had been relatively quiet. “We’re seeing hundreds in the room rather than thousands, so I think it will be a slow build.”
The capacity of the underwriting room has been cut drastically. Before the pandemic, it could hold up to 7,000 people a day, but the maximum has now been set at 3,000.
Mr Neal said Lloyd’s was helped by the layout of its famous Richard Rogers-designed building. People can travel between floors via escalators rather than lifts, so it can accommodate more people than a traditional office block.
Lloyd’s has also been working on its digital capabilities during the lockdown. “We were determined that when we reopened the room it would be different, and it is,” said Mr Neal. “There is the ability for the broker and the underwriter to be present, or for one party to be present and the other to be digitally present.”
He added: “It’s an opportunity for us to reinvent the way the underwriting room operates.”
Lloyd’s said on Thursday that it expected to pay out £5bn in claims relating to Covid-19. The insurers that operate in the market are facing payouts on a wide variety of policies, including event cancellation and business interruption.
The market has already paid out £2.4bn for coronavirus claims, net of money recovered on reinsurance contracts, which insurers buy to protect themselves from large losses.
The claims figure could rise if the UK High Court rules against the insurance industry in a recent case brought by the regulator, the Financial Conduct Authority, over business interruption cover. A ruling on the case is due next week.
The £5bn of expected claims pushed Lloyd’s to a £400m first-half loss. The market’s combined ratio, which is a measure of claims and costs as a proportion of premiums, worsened from 98.8 per cent in the first half of last year to 110.4 per cent.
Prices for the sort of commercial insurance sold at Lloyd’s have been rising over the past few months, as insurers aim to improve their profitability following heavy coronavirus-related claims. Lloyd’s said prices had increased almost 9 per cent in the first half of the year, although business volumes declined by a similar amount.