Lloyd’s of London is to close its underwriting room — the largest single market place for marine insurance — from 4pm UK time on Thursday.
The move to shut the doors of the iconic One Lime Street building, comes after chief executive John Neal conducted a trial last Friday by closing the room for 24 hours.
The successful completion of the stress test has encouraged Neal and his Lloyd’s executive committee to close the room as the UK’s battle against the spread of coronavirus increasingly concentrates on London.
The moves comes as many of the Lloyd’s brokers that supply the historic 300-year-old trading floor’s business are already working remotely.
However, business is set to continue as usual as the Lloyd’s market turns to its emergency trading protocol, which will allow the main marine lines of hull and machinery, war risk and cargo to be renewed and for claims to be met.
The Lloyd’s Market Association (LMA) has already developed an insurance policy clause that will allow cover to be automatically extended even if, in the worst case scenario, Lloyd’s emergency trading protocol fails.
The LMA began working remotely on Tuesday.
The coronavirus may turn out to accelerate Neal’s ongoing efforts to modernise business practices at Lloyd’s. The sort of electronic placement and claims settlement that Neal has been encouraging underwriters to adopt may now be forced to come into play during the crisis.
In terms of marine business, Lloyd’s cover largely focuses on the protection of marine property against physical damage. These are areas of cover which are largely directly unaffected by the pandemic.
However, a slowdown in world trade and the effect of the coronavirus on the financial well-being of shipowners will have underwriters worried whether they can sustain recent efforts to increase marine premium.
Lloyd’s annual results, due at the end of the month, are expected to show the marine business remains one of its poorest-performing sectors. Ahead of the announcement of the results, one report suggests that marine sector losses will be the worst for more than a decade.
