A startling revelation from Lloyd’s systematic risk scenario indicates that a future human pandemic could trigger staggering global economic losses of up to $13.6 trillion over five years. Developed in collaboration with the Cambridge Centre for Risk Studies via Lloyd’s Futureset initiative, the analysis presents a spectrum of potential impacts. In a mild scenario, losses could amount to $7.3 trillion, while in an extreme case, they could soar to $41.7 trillion, translating to a reduction in global GDP ranging from 1.1% to 6.4%.
The economic fallout would predominantly emerge from disruptions across various industries due to lockdowns and travel restrictions. Notably, the transportation sector, which constitutes over 10% of global GDP, would be severely hit. Prolonged international travel limitations would only serve to compound these economic woes, further straining global economies.
However, there is a glimmer of hope. Rebekah Clement, Lloyd’s Corporate Affairs director, emphasized in a press release that insurance is not merely a financial safety net but a crucial enabler of societal resilience and recovery. The insurance industry, she contends, is well-prepared to assist businesses and governments in bracing for future pandemics, regardless of their complexity and variability. This underlines the potential significance of insurance in cushioning the potentially catastrophic economic blows that could arise from a pandemic scenario.
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