Lloyd’s estimates global underwriting losses from COVID-19 will reach $US107 billion ($165.62 billion) this year, making it the biggest claims year the industry has seen.

The impact of the pandemic is global, systemic and long-term, Lloyd’s says. This is unlike the hurricane-struck mega-claims years of 2005 and 2017, which were geographically contained events.

And unlike those natural catastrophes, the industry will also experience falls in investment portfolios of an estimated $US96 billion ($148.64 billion). Lloyd’s says the total projected loss to the insurance industry will be $US203 billion ($314.31 billion).

“Taking all those factors together will challenge the industry as never before,” Lloyd’s CEO John Neal says, adding the economic “shock” makes COVID-19 unique.

Lloyd’s expects to pay up to $US4.3 billion ($6.6 billion) in claims. It expects 58% of customer payouts will be in the US and worldwide, 15% in the UK and 7% in Europe. By product, Event Cancellation accounts for 31%, Property Covers 29%, Credit Lines 11% and 15 other classes 29%.

The total is on par with the 9/11 terrorist attacks in 2001 and 2017’s triple-whammy of hurricanes Harvey, Irma and Maria.

But Lloyd’s warns that "once the scale and complexity of the social and economic impact of COVID-19 is fully understood, the overall cost to the global insurance non-life industry is likely to be far in excess of those historical events”.

The market is considering establishing a ‘Recover Re’ insurance vehicle offering “after the event” cover for pandemic related business recovery, including the current COVID-19 pandemic.