After nearly paying out up to £10 Billion in claims to customers during the Covid-19 pandemic, Lloyd's of London has been able to bounce back by reaching a before-tax profit of £1.4 Billion in the first half of 2021.
John Neal, Chief Executive at Lloyds of London, said:
"Against this backdrop, Lloyd's has successfully repositioned the market for sustainable, profitable growth as evidenced in this strong set of financial results."
The Financial Statistics
This profit is vastly improving from 2020's overall loss of £0.4 billion, as claims concerning Covid-19 kept cashing in, which resulted in a profit total (before tax) of £1 billion from the end of 2020 to mid-2021. Additionally, the market underwriting profit has increased from a loss of £1.3 billion (in 2020) to a profit of £1 billion (in the last six months) in 2021.
Gross written premiums have also grown from £20 billion (end of H1 in 2020) to £20.5 Billion (in H1 2021). While this increase may be limited in growth, it holds good evidence that we may see this figure continue to grow in the next half a year. This slight increase in premium rates, customer retention and individual new growth of clients within the markets finding placement reaches a positive height for the first time in four years.
Lloyds of London's Combined Operating Ratio (COR) increased by 4.8% this year (2021), where the ramifications of the Covid dropped to 97% at the end of last year (2020). The question is, does this increased profit margin indicate a possibility that we may be entering a softer market after years in the hard market?
What would a soft market mean?
The market would need profits to continue for various markets in the rest of 2021 and the new year to indicate better if a soft market is on the horizon.
A soft market would typically mean:
- Increased capacity to place business for both new businesses and renewals
- Policies could be written with higher limitations
- Increased competition among insurance providers and brokers
- Broader coverage options in the market
- Low insurance premiums
- Relaxed underwriting criteria's
After nearly ten years of worsening conditions in the hard market, a softer market would allow insurers and brokerages to breathe and grant them the freedom to place niche risks with better insurance options for those going through claims processes or buying insurance coverage.
You can read more about soft markets vs hard markets here.
How has Covid 19 affected the hard market?
John Neal, Lloyd's chief executive, has said:
"In an uncertain world, Lloyd's remains acutely focused on supporting our customers when they need us and in the first half of 2021, we have paid out nearly £10 billion in claims to help the recovery of businesses and economies globally."
Covid-19 has helped intensify the hard market situation – making the strain on competitive premiums and limited coverage options available. With businesses facing bankruptcy, individuals losing their jobs, and the common worker's health standard being heavily impacted, many insurance policies have been cancelled or increased.
However, what can be looked at positively is that the profit margins recorded are increasing. As the pandemic loosens its grip on the insurance industry; we are more likely to see profits increase even more as we continue to switch back to normal working conditions unaffected by Covid-19.
Servca – Undefeated by the Market
While many insurance brokers are finding the hard market impossible to navigate, we have had great success in placing returning business, renewals and new business enquiries in Medical Malpractice Insurance, Professional Indemnity Insurance and General Liability policy placements.
Using the hard market to our advantage, we can even give niche high exposure risks, highly distressed or rejected risks a full-on market review, and provide coverage options.
Here at Servca, it is our priority to fully protect your clients against claims.
That is why we offer:
- Competitive quotations and premiums.
- Fully transparent communication.
- Specialised brokers with experience in placing your client's occupational industry.
- Direct contact with a single broker dedicated to your clients' needs.
- Silent review services and full market review for clients already placed elsewhere.
- Risk management services are designed to reduce risk to claims, exposure and the impact of claims that occur.
- Marketing resources for clients exampling claims, risk management and the processes of insurance.
Contact us today to find out any additional information on how we can benefit you and your client(s).
All statistics are provided from an article by Insurance Times.