The new solution uses a “parametric” trigger, so a customer is automatically indemnified if any unforeseen event leads to reduced profits.

This is the first policy developed by Lloyd’s Product Innovation Facility, launched in June to accelerate the development of insurance and reinsurance products for today’s new and emerging risks. The Facility is backed by a group of 24 Lloyd’s syndicates who have together committed over £100 million of underwriting capacity.

The new product protects hotels from lost profits, for example, due to unexpected events occurring within their market that are outside the control of the hotel.  The terrorist attacks which occurred in Paris three years ago had a catastrophic impact on the city’s hotels, with revenues said to be down by 15% that summer, highlights a clear example of this. As does the case in Salisbury after the Novichok nerve-agent incident in 2018 which saw many parts of the city cordoned off during the Police investigation and subsequent year-long clean-up, deterring tourists.

As the product defines an insured event as the difference between forecast and actual market trading data widely accepted by the hotel industry, the need for named perils has been abolished exemplifying the creativity and flexibility of the Lloyd’s market.

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