The scenario, developed in partnership with the Cambridge Centre for Risk Studies under Lloyd’s Futureset initiative, models three levels of severity. Economic losses are projected to range from $7.3 trillion in a mild scenario to $41.7 trillion in an extreme one, representing a potential reduction in global GDP of between 1.1% and 6.4%.
The research underscores the profound economic impact of widespread industry disruptions driven by local lockdowns and international travel restrictions. With the transportation sector alone accounting for over 10% of global GDP, sustained limitations on global travel could lead to significant financial repercussions.
To address the risks associated with pandemics, the insurance industry has developed specialized solutions. These include coverage for outbreaks of known and unnamed infectious diseases, insurance for vaccine development and distribution, and protection against business interruptions or event cancellations during a pandemic.
Rebekah Clement, Lloyd’s Corporate Affairs Director, emphasized the insurance industry’s critical role in mitigating such risks. “Our research shows that insurance is more than a financial safeguard; it is a critical enabler of societal resilience and recovery,” Clement stated. “Insurers not only pay claims but also provide guidance on proactive measures to reduce the impact of potential crises and mobilize resources for emergency response and containment efforts.”
This marks the sixth scenario produced by Lloyd’s Futureset, a program dedicated to equipping insurers, policymakers, and risk managers with data-driven insights to prepare for significant global risks. The report highlights the importance of collaborative planning and innovation in mitigating the economic and societal impacts of future pandemics.
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