Lloyd’s, the specialist insurance and reinsurance market, announced the creation and in principle approval of its newest “syndicate-in-a-box,” Syndicate 1796,* set up to insure the storage and transportation of a COVID-19 vaccine – once it is developed – to emerging economies.
This initiative forms part of Lloyd’s response to the far-reaching impacts of the pandemic, following the publication of a report earlier this month, designed to help develop pandemic recovery and resilience for customers and economies.**
Syndicate 1796 has been developed by Parsyl, an insurance technology company, and Lloyd’s Lab alumni, in close partnership with Ascot as a Lloyd’s insurer, and in cooperation with AXA XL, McGill and Partners and Gavi – The Vaccine Alliance, which is an international organization created in 2000 to improve access to new and underused vaccines for children living in the world’s poorest countries.
The syndicate forms the foundation of the new Global Health Risk Facility (GHRF) at Lloyd’s, which aims to provide comprehensive insurance and risk mitigation services to support the manufacturing and distribution of COVID-19 vaccine development efforts. It aims to start writing business from Oct. 1, 2020.
In the GHRF, Syndicate 1796 will be backed by development finance capital, allowing it to share risks with leading cargo syndicates, making better, fairly priced cargo coverage available.
The GHRF will offer “All Risk” cargo coverage for transit and storage risks on all global health products related to COVID-19 and any other infectious disease control and prevention programs. The creation of a public-private syndicate to address a global health emergency is the first in Lloyd’s 330-year history, said Lloyd’s in a statement.
Led by Ascot, the GHRF will take a portfolio approach, focusing primarily on global distribution of products to low income countries supported by global public health agencies, such as Gavi; the Global Fund to Fight AIDS, TB and Malaria; the President’s Emergency Plan for AIDS Relief (PEPFAR) and the United Nations International Children’s Emergency Fund (UNICEF).
The GHRF will also offer coverage via direct insurance or reinsurance, for in-country distribution risks to ensure vaccines and other commodities are protected as they are stored in central warehouses and travel through health systems, explained Lloyd’s.
Eligible insureds will include private manufacturers, procurement agents, logistics companies, ministries of health and other public agencies supporting the distribution of COVID-19 vaccines and other lifesaving products to low income countries.
“There is broad consensus that life can only return to normality after a vaccine is developed, distributed and administered around the world. Lloyd’s has an important role to play in insuring the many risks associated with this global medical response and we are delighted to approve a new innovative syndicate that will provide effective cover for local vaccine distribution supply chains,” said John Neal, CEO, Lloyd’s of London.
“This unique partnership is a real demonstration of the value and ingenuity the Lloyd’s market can bring to help address a global health emergency, as we share risk to support the brave efforts of those racing to develop and distribute a COVID-19 vaccine,” he added.
“We’ve seen Lloyd’s stand behind risks to some of the world’s greatest achievements and innovations. We asked, why not find a way to stand behind the largest vaccine campaign in human history,” commented Ben Hubbard, CEO of Parsyl. “The Global Health Risk Facility will do this by sharing risk and leveraging new data to unlock insurance solutions for high stakes vaccine distributions around the world.”
“The GHRF is an excellent example of how the insurance industry is addressing previously uninsured risks,” said Andrew Brooks, CEO of London-based Ascot Group. “Ascot and the wider insurance market has the underwriting expertise, but to put together a facility such as this requires syndication, infrastructure and market collaboration which Lloyd’s is uniquely placed to deliver. Such a facility is enabled by high quality new entrants such as Parsyl who have the ideas, technology and data to deliver this positive humanitarian solution.”
“We are proud to support this critical initiative and be part of the largest movement of medical vaccines in history,” said Steve McGill, CEO, McGill and Partners, the London-based broker. “At McGill and Partners, we are delighted to have worked on this audacious venture that combines innovative insurance and data and technology driven solutions to help dramatically improve supply chains and ultimately save lives.”
Sean McGovern, CEO, AXA XL UK: “”The COVID-19 crisis has escalated the need to improve the already challenging global distribution of vaccines. By sharing data and through innovative risk mitigation, this facility will play a crucial role in ensuring that vaccines travel safely through the global supply chain to all corners of the world. This is another example of the insurance industry working in a public private partnership to address critical public health issues.”
* Syndicate 1796 has received in-principle approval from Lloyd’s Council. The decision to grant permission for the syndicate to underwrite is contingent on completion of a number of relevant operational workstreams. This work will be concluded through August.
** The Lloyd’s report, titled Supporting global recovery and resilience for customers and economies: the insurance response to COVID-19, proposes a number of ways the insurance industry could fast-track global economic and societal recovery from the impacts of COVID-19. These include three open source frameworks (ReStart, Recover Re and Black Swan Re), which could help build future pandemic resilience through innovative partnerships and products.
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