Lloyd's issues warning on emerging risk.
Insurers must prepare for a worldwide pandemic such as avian flu, Lloyd’s emerging risks teams has warned.
A worldwide pandemic has historic recurrence rates of between 30 and 50 years and another catastrophe is likely to occur sometime in the future, the report says.
Trevor Maynard, emerging risks manager, said: “In some respects business leaders have to ensure that they are not the odd one out, particularly given the large volume of information that is available to help with planning.
“You do not want to be the one business that has not taken adequate steps to prepare contingency plans in the case of a pandemic and see your business perform worse than your peers.”
The report, called ‘Pandemic – Potential Insurance Impacts’, claims a worldwide pandemic could devastate the global GDP by up to 10 per cent – leaving insurers facing heavy losses.
The most devastating pandemic in modern history was the Spanish Flu, between 1918 and 1920, which killed up to 100million people, mostly fit and healthy people.
He added: “The significant message is that society should not optimise to one particular scenario as a worst case. Much has been said of the 1918 Spanish Flu epidemic, which is said to have killed up to 100 million people worldwide.
“While Avian Flu is seen as the most likely next pandemic, we have to ensure we are prepared for other types of pandemics that may require different responses and pose different challenges —some of which may well have higher rates of mortality than flu.”