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LONDON – Insurance marketplace Lloyd’s of London warned on Thursday that early estimates suggest the impact of Hurricanes Harvey and Irma could cost it $4.5 billion (£3.3 billion).
The warning came as Lloyd’s pre-tax profits fell by 16% to £1.22 billion for the first half of the year. That period had a relatively low level of natural disasters, suggesting the second half of 2017 could be even tougher.
Lloyd’s said in its interim report:
“Windstorms Harvey and Irma made landfall on the United States and the Caribbean towards the end of August and early September 2017 respectively.
“These events have caused significant damage in the states of Texas and Florida in the United States and to a number of islands in the Caribbean. It is currently too early to reliably estimate the financial impact of these loss events to the Lloyd’s market given the level of uncertainty at this stage of development. Our preliminary analysis indicates net claims, after reinsurance, to the Lloyd’s market in the region of $4.5bn.”
Harvey and Irma’s economic cost to the US has been estimated as high as $300 billion, with insurers thought to be liable for half of that. However, insurance companies cover themselves through the so-called “reinsurance” market, where companies take out insurance themselves. Lloyd’s disclosure suggests this reinsurance will not cover all the estimated damage.
Hurricane Maria also recently battered the Caribbean and Lloyd’s said it is too early to estimate that impact of that disaster.
Lloyd’s CEO Inga Beale said the marketplace’s results on Thursday reflect “the challenging conditions that have shaped the sector over recent years.”
She added: “Whilst these results do not cover the current hurricane season in the Caribbean and United States, 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.
“It is our ability to respond quickly and effectively in times like these that differentiates the Lloyd’s market and is ultimately what we are here to do.”