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Wednesday, December 8, 2021

The Relevance of Insurance in Tough Times

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by Lloyds

Despite the wonders of the modern society, we remain at the mercy of the elements. And when earthquakes, floods and wildfires strike, people must rebuild their homes and businesses time and time again. This comes at a huge financial cost for individuals and governments, which without insurance many could not afford to pay.

Insurance is the financial backbone for society. It provides the security that enables people to carry on in the knowledge that, should anything happen, they can recover and rebuild.

Lloyd’s, the world’s leading specialist insurance market, has been providing insurance for over three hundred years and has picked up the pieces following many disasters.

In 1906, an earthquake measuring 8.25 on the Richter scale hit San Francisco and devastated the city, destroying buildings and sparking fires that raged for three days. Lloyd’s played a central role in rebuilding the seventh largest city in the US and led the way for the insurance industry. This was the first time insurers were faced with such a huge loss and where Lloyd’s forged its reputation for quickly paying valid claims.

Nowadays, insurers have risk models to test possible exposures across a vast range of events in different regions. Lloyd’s looks at worst case scenarios to ensure that should disaster strike, claims can be paid to compensate – the real disaster would be if it didn’t pay out.

This year has been particularly testing for Lloyd’s. When the Chilean earthquake struck, Lloyd’s sent out a team to help assist in ensuring the quick payment of valid claims.  The estimated claim bill for Lloyd’s will be $1.4 billion.

Without insurance, the impact of a disaster could be too great to recover from. Lloyd’s business is risk, and the financial security it offers to businesses, industries and cities enables society to function without the extra burden.

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