What's going on?

Lloyd�s of London may feel it�s got more in common with Dumb and Dumber than just its lead character�s name: the world�s largest insurance market revealed a first-half loss on Thursday that could spell big costs ahead for insurers and insured worldwide.

What does this mean?

Lloyd�s � also not to be confused with the British bank of the same name � is an odd fish in the insurance world. The historic marketplace�s 90 �syndicate members� insure people and businesses, including other insurance companies via �reinsurance�. Its broad span therefore makes it a good barometer for the insurance industry as a whole � and that barometer�s currently reading �high pressure�. Over the last six months, Lloyd�s made a $530 million loss before tax, largely due to $3 billion of coronavirus-related payouts in the period. What�s more, it expects to fork out another $3 billion throughout the rest of 2020.

Why should I care?

The bigger picture: So you�re telling me there�s a chance��

Back in March, Lloyd�s estimated insurance companies around the world � excluding life insurers � would end up on the hook for more than $100 billion in coronavirus claims due to disruptions to travel, events, and trade. But they�re not taking it lying down: UK financial authorities are currently contesting insurers� avowed lack of liability for certain pandemic-related claims which typically apply only in cases of physical damage. The outcome could lead to higher costs (or savings) for insurers everywhere…

Zooming in: Our pets� heads are falling off!

The key measure of an insurance company�s profitability is its �combined ratio�. This shows losses and expenses as a percentage of revenue from premiums, revealing how good an insurer is at profitably selling policies. The Lloyd�s ratio was 110% in the last six months compared to 98.8% the same time last year, when the firm made a $3 million profit. Insurers trying to recoup their 2020 losses by charging more for protection could make your travel, health, business � and, yes, parakeet � insurance more expensive.