However, climate change brings more unpredictable and faster-developing storms each year

London, 15 June 2026: The Lloyd’s Market Association (LMA) hosted a storm season event led by McKenzie Intelligence Services (MIS) last week to mark the start of the official hurricane season for North America in 2026.

The LMA briefing, with presentations from meteorologist Tomasz Schafernaker and McKenzie Intelligence Services, highlighted that 2026 has an unusually high chance of seeing lower than normal hurricane activity.

The National Oceanic and Atmospheric Administration (NOAA), a US government body, predicts the outlook at 55% probability of below-normal activity with just a 10% chance of a higher-than-normal season.

This is a rare prediction. Since 1995, there have been 22 hurricane seasons with above-normal activity, including ten “hyper-active” seasons, showing how unusual this outlook is.

The NOAA’s expectation for this year is as follows:

• 8-14 named storms
• 3-7 hurricanes
• 1-3 major hurricanes (category 3 excess 111mph – category 5 157mph sustained)

One of the keys to likely activity is warm sea surface temperatures (SST). For example, in 2020, the most active year on record, there were 30 named storms, 13 hurricanes and six major hurricanes – all driven by very warm sea surface temperatures.

However, while SST in Atlantic are currently very warm, the developing El Nino conditions are likely to counteract this and point to this season being less active. Some uncertainty remains in the predictions, largely influenced by the difficulty of predicting the El Nino effect. With high sea surface temperatures, El Nino needs to be strong to counteract the effect, although it is showing signs of strengthening.

NOAA considers all available prediction models when publishing its assessment, including the published 2026 seasonal hurricane forecasting by Colorado State University (CSU).

We can’t be complacent

Janine Powell, Claims Director, Lloyd’s Market Association, commented: “It only takes one major hurricane to make landfall have devastating effects. Even a below-normal season can produce one life-changing storm, causing billions in economic damage and upending communities and livelihoods. Think back to 1992’s Hurricane Andrew. This enormous storm occurred in a season predicted to be below normal and Andrew was the most damaging storm to hit the US in decades.”

The impact of climate change

“The pattern that has emerged in more recent years is that of storms forming later and then developing into major hurricanes more quickly. This change of pace means communities have less time to prepare or evacuate and the storms cause greater devastation when they hit. For example, Hurricane Melissa in 2025 rapidly intensified to a devasting category 5 storm in just 39 hours, with catastrophic consequences for Jamaica and preliminary estimates putting the economic loss of the damage at US$6-7bn (GBP4.5-5.2bn).”

Better data is making extreme weather forecasting more accurate

Forecasting storms is difficult but advancements in meteorological models like Google DeepMind’s WeatherNext 2 are now making long-range forecasting more accurate. These models help give people more time to prepare for major storms by combining data streams in a new way, for example, bringing together wind data, sea temperature data and high-altitude weather patterns, to create real understanding of how these interact to create weather patterns.

Janine Powell added: “Insurers can (and many do) use the wealth of data they have from past events to create actionable insights to help educate people to take steps to keep themselves, homes and businesses as safe as possible. As a market, we have prepared as best we can to respond to our (re)insureds in the face of significant weather pattern changes. Over the last few years, we’ve invested in technology solutions to speed up our response to claims, helping us put money in the hands of customers when they need it the most.”

The nature and degree of damage resulting from natural catastrophes like hurricanes and wildfires can increasingly be reliably mapped by technology solutions like McKenzie Intelligence Services’ Global Events Observer (GEO) product. When these are overlaid with risk level data and augmented with ground source intelligence, it provides a reasonably accurate assessment of the damage zones.

Tomasz Schafernaker, Meteorologist and BBC Weather Presenter, commented: “Predicting hurricane activity in any season is always a challenge. Even during a quiet season, there is always the risk of a powerful hurricane, particularly towards the end of the season and closer to land. While the Atlantic may see a quieter season, the ongoing El Niño is already contributing to a higher-than-normal tropical cyclone risk along the Pacific coast of North and Central America in 2026.”

ENDS

Notes to Editors

The above is provided for information purposes only and does not constitute advice, recommendations or predictions; individuals should obtain their own independent advice before taking any action.

Media relations contacts

LMA:
Carole Porter, Head of Marketing and Communications | +44 20 3307 3947 | Email: carole.porter@lmalloyds.com

Omnia Partners:
Victoria Sisson, Director | +44 794 129 4872 | Email: victoria.sisson@weareomniapartners.com

Notes

About the Lloyd’s Market Association

The Lloyd’s Market Association (LMA) exists at the very heart of Lloyd’s, a world-leading global marketplace for complex risk where solutions to challenges are delivered every day. 59 Lloyd’s managing agents and members’ agents are members of the LMA.

We represent our members’ interests to organisations including governments, regulators, and the market’s central supporting body, the Corporation of Lloyd’s. We provide professional and technical expertise in areas ranging from model policy wordings to the implementation of innovative technologies. We connect with our members to identify and resolve issues facing the market, and work in partnership with Lloyd’s and the other market associations to influence initiatives and outcomes. We operate the market’s most comprehensive technical education service, the LMA Academy. For more information visit: www.lmalloyds.com.

Following Brazilian Law No. 15.040/2024 coming into effect in December 2025, the LMA, in conjunction with local counsel, has reviewed its model Intermediary Clauses. LMA5101 – Brazilian Intermediary Clause 1 (Reinsurance) and LMA5102 – Brazilian Intermediary Clause 2 (Reinsurance) remain fit for purpose with no changes required. Use of an intermediary clause is mandatory under Brazilian law.

All LMA model clauses are purely illustrative and are published and distributed for the guidance of Lloyd’s managing agents, brokers and other market participants. All contracting parties are free to agree to different conditions/amend the model clauses as they see fit; the LMA does not protect its intellectual property rights over model clauses. It is for underwriters to decide whether or not any contractual language is acceptable on any given risk. Model documents are available on the Lloyd’s Wordings Repository (LWR).

Alex Sheehan
Senior Executive, Regulatory Affairs
alex.sheehan@lmalloyds.com

Ray Koh
Legal Counsel
ray.koh@lmalloyds.com

The LMA, in conjunction with Wotton Kearney Australia, is delighted to run the LMA Third Party Claims Educational Programme for Singapore and Australia for the second time. A slightly extended scope to the inaugural trip, the programme will now cover general liability, financial and professional lines.

In our latest video, hear from last year’s delegates on their key takeaways, favourite memories and how the trip has helped them in their careers.

For more information and to apply, please visit our dedicated page.

On 13 May, the LMA jointly hosted a session on war and terrorism insurance with Antares.

The session explored why contract terms such as undeclared war, civil war, terrorism, insurrection and hostilities are increasingly difficult to define – and what this means for underwriting, claims and reinsurance recoveries in an era shaped by cyber risk, hybrid conflict, proxy actors and rising geopolitical tension.

Attendees heard from:

• Arabella Ramage, Legal and Regulatory Director, LMA
• Neil Roberts, Head of Marine and Aviation, LMA, Secretary of the Joint War Committee
• Wesley Selwyn, Class Underwriter, Terrorism, Antares
• Nick Lang, Class Underwriter, Antares

Download the slides here and watch the recording below.

The Joint Specie Committee (JSC) has published a new model clause under the following reference and title:

JS2026-025 Conceptual Works of Art and Their Certificates of Authenticity

This clause is designed to assist with insured collections, which include conceptual artworks where the value may lie substantially in the certificate of authenticity rather than in the artwork itself.

The new clause is hyperlinked above and available for immediate use. It will also be made available on the Lloyd’s Wordings Repository (LWR), which can be accessed via www.lloydswordings.com and on the IUA website.

All LMA and IUA model documents are purely illustrative and are published and distributed for the guidance of underwriters, brokers and other market participants. All contracting parties are free to agree to different conditions/amend the model documents as they see fit; the LMA and IUA do not protect their intellectual property rights over model documents. It is for underwriters to decide whether or not any contractual language is acceptable on any given risk.

The LMA convened an online briefing to consider financial crime and sanctions questions arising for insurers with respect to the insurance of commercial shipping transiting the Strait of Hormuz.

The briefing was led by John Kimbell KC (Quadrant Chambers), with UK Terrorism Act and other financial crime considerations to be highlighted by Richard Neylon (Holman Fenwick Willan LLP).

The speakers outlined their key legal conclusions, in particular in relation to:

• The sanctions and financial crime implications for existing and new marine coverages.
• Payment of transit fees for the Strait.
• Safeguards that insurers should be considering.
• Related reporting and compliance issues.

Download the presentation slides here.

At the LMA Wordings Forum on 21 April, we heard from Jonathan Hopkins, Associate at DAC Beachcroft, on artificial intelligence and policy wordings.

Download the presentation slides

Welcome to our latest report on key activities and developments within the Risk and Sustainability areas relevant to the market arising in the first quarter of 2026.

Risk

CRO Committee priorities and CROs survey feedback: In Q1, the CRO Committee ran a membership survey to initiate a market-wide invitation for CROs to express interest to join the CRO Committee and gather key information, to ensure the committee remains representative of the whole market. Feedback reviewed highlighted that the committee’s most valued outputs relate to effective lobbying of Lloyd’s and regulators, peer discussion and networking forums, and production of practical guidance. The most frequently mentioned risk topics for 2026 include geopolitical and macroeconomic risks, AI and technology governance, climate risk and regulatory change. Aligned with the committee discussions in Q4 and the survey results, committee members agreed on the following deliverables:

• Develop a risk practitioners’ guide to help risk functions with second line oversight of the new ‘enhanced underwriting’ methods.
• Geopolitical risk: A dedicated subgroup has been formed to examine and share members’ approaches on assessing geopolitical risk.
• Stress and scenario testing (SST): Develop guidance on how SST can be used for board decision making, including potential use as a playbook with identified management action. 
• Talent: A survey will be circulated in April to identify demographics of the CRO function, how the function interacts with other assurance functions and where talent pain points are located. This will be followed by playback to the market and networking events, with an opportunity for mentoring by CROs.
• LMA risk radar: The CRO committee will provide support and guidance to the LMA effort to provide a view of the risks emerging from and concerning all LMA committees and teams.

Lloyd’s Market Oversight: Lloyd’s executives joined the committee meetings to provide insights on the priorities of the 2026 Market Oversight Plan as well as to address additional topics, including forthcoming actions related to the PRA and Lloyd’s co-operation agreement, the PRA’s Dynamic General Insurance Stress Test (DyGIST) and the changes within Lloyd’s oversight, including the new Market Oversight Manager role. The CRO Committee raised the issue of consistency across Lloyd’s various oversight teams around outcomes-based oversight and a uniform Lloyd’s PBO approach. Lloyd’s acknowledged the issue and agreed to continue challenging oversight teams to be clear around the risk being assessed, define expected outcomes and focus judgement on outcomes. For example, Lloyd’s intends to make better use of ORSA submissions as a primary source of information, with the Principle 10 team being tasked to review and share insights across oversight teams, aiming to reduce duplicate requests.

PRA’s DyGIST exercise: On 24 February, Lloyd’s and the PRA hosted an event for DyGIST sponsors to present expectations and approach to be followed in May. This was followed by a presentation to the LMA CRO committee. From a CRO/risk function perspective, the emphasis is on real‑time decision making under uncertainty, the quality of internal coordination and governance, and the credibility of assumptions and management actions taken as the scenario evolves. In advance of the live exercise the LMA has arranged cross‑functional drop-in sessions, bringing together risk and other functional experts to discuss preparedness steps, surface concerns or questions for Lloyd’s, and agree the approach on how the LMA can best support our members during the event. The event links to register are as follows:

• Session 1: 20 April 9:00
• Session 2: 23 April 10:00
• Session 3: 29 April 16:00

Geopolitical risk: A sub-group of the CRO Committee is currently working on a geopolitical risk assessment framework which will be circulated to all CROs ahead of the kick-off of 2027 business planning discussions with Lloyd’s. To support risk leaders in navigating the geopolitical risk landscape, the LMA organised a briefing session hosted by Control Risks on 15 April.

Risk culture: The Risk Next Gen group is finalising a risk culture assessment framework which will be presented to the CRO Committee in May and subsequently circulated to all CROs.

AI risk management: Having worked with Barnett Waddingham on an AI risk management survey and an AI adoption toolkit, we brought together Chief Risk Officers, Chief Actuaries and other senior professionals responsible for risk and actuarial oversight. The event, held on 16 April, introduced two new LMA reports: findings from a market survey on AI risk management and an upcoming walkthrough of an AI adoption toolkit, due to be published 23 April. 

The LMA continues to provide periodic updates to the LMA Legal & Regulatory Radar.

Sustainability and Climate Risk

Underwriting the Transition: On 03 March, in collaboration with KPMG, we released the second edition of the Underwriting the Transition report. This second edition reveals a fundamental shift from last year’s transition assumptions. The average increase in global temperatures has now exceeded 1.5°C and the consensus following COP30 in Belém is that the risk of a “disorderly transition” has heightened. The insurance market is now navigating a dual challenge: intensifying physical risks and an evolving transition risk profile. This includes, for example, the PRA mandating that climate risks (including climate litigation risk) should be embedded into governance and risk appetites before June 2026.

PRA SS5/25 and dialogue with the PRA: During Q1, the Climate Risk Working Group continued to focus extensively on PRA SS5/25 and related supervisory expectations. In February, the group was joined by the PRA climate supervision team as part of structured engagement between the LMA Climate Risk Working Group and the PRA. The PRA team outlined next steps on SS5/25 and engaged directly with market climate risk practitioners, responding to questions on proportionality, climate scenario analysis, governance arrangements, and effective challenge at board and senior management level. This session provided an opportunity for open dialogue on how supervisory expectations are evolving and how firms can demonstrate alignment in a proportionate and practical manner.

Climate-related risk materiality assessment framework: Materiality assessment was agreed by the LMA Climate Risk Working Group (CRWG) as one of its key deliverables for 2026. Members discussed the need for robust, yet proportionate materiality assessment frameworks aligned to SS5/25, including governance involvement, definitions and thresholds for materiality, and treatment of physical, transition and litigation risks. To support this, the CRWG has developed a materiality assessment survey, which can be accessed here: LMA CRWG: Climate-related risk Materiality Framework Survey – Fill in form. The survey is designed to capture current market practices and will inform the development of a materiality assessment framework for market practitioners, intended to support firms at different stages of maturity and with differing risk appetites.

Climate scenario analysis: Climate scenario analysis was also agreed as a key deliverable for the LMA CRWG. Q1 discussions focused on the purpose and application of scenario analysis, including the balance between regulatory compliance and strategic value, the use of short‑term versus medium‑term horizons, and the relative role of quantitative and qualitative approaches. Members highlighted challenges in producing decision‑useful outputs for boards and discussed the potential development of short‑term scenario playbooks, including the use of sectoral pathways from the Underwriting the Transition report as a practical approach. The group also discussed the role of external expertise, particularly in supporting scenario design and board‑level communication. In the meantime, the group is currently liaising with Lloyd’s Risk team to collaborate on the Corporation’s efforts to meet the PRA’s climate scenario expectations and avoid any duplication.

Climate-related litigation risk: Climate‑related litigation risk remained on the CRWG agenda. Members revisited challenges associated with quantification, particularly for casualty business, and discussed the role of claims coding initiatives and the need for greater clarity on Lloyd’s aggregate‑level requirements.

Sustainability reporting and disclosures’ landscape: LMA organised a dedicated session with the Deloitte Sustainability team for sustainability reporting professionals from the market. The session, held on 24 March, provided an overview of the current sustainability disclosures landscape, covering developments in the UK, Europe and other jurisdictions, and explored how different reporting regimes are evolving and interacting. The session was positioned as an educational and horizon‑scanning discussion to support firms navigating an increasingly complex disclosures environment. The session was recorded, and a link will be shared on the LMA risk webpage in due course.

Repositioning of the Sustainability Committee in light of market and economic context: During Q1, the Sustainability Committee held a dedicated strategic discussion on the future purpose and positioning of the committee, reflecting a shift in the general economic sentiment and evolving market priorities. Members noted that when the committee was originally established, sustainability activity across the market was strongly shaped by regulatory direction and a clearly defined Lloyd’s sustainability function. This context has since changed and members discussed how the committee can continue to provide value to the market in this changed environment. There was strong consensus that the committee continues to provide a valued forum for sharing best practice, peer discussion and collective thinking, and that there is an opportunity to sharpen its impact by aligning more closely with underwriting‑led priorities. The committee will therefore orient its outputs towards the LMA Chief Underwriting Officer (CUO) Committee, rather than operating primarily as a standalone forum. As a result, it is likely that the focus of the committee will turn to:

• Insurability, including consideration of protection gaps and how sustainability and climate‑related dynamics affect existing or new product design as well as the long‑term insurability of risks.
• Adaptation and resilience, particularly in relation to how underwriting and product design can support resilience outcomes.
• The intersection of AI and sustainability, viewed through both commercial and operational lenses, including how new technologies may support sustainability‑related objectives.

The minutes of all committee meetings are available below (member login required).

• Chief Risk Officers’ Committee
• Risk Next Generation Committee
• Sustainability Committee
• Climate Risk Working Group

Please get in touch to find out more or if you have queries on the matters in this update or in the minutes.

Paul Davenport
Finance and Risk Director
paul.davenport@lmalloyds.com

Africa remains the largest source of claims, while Europe sees the highest total payouts 

London, 20 April 2026: The Lloyd’s Market Association, International Underwriting Association and London & International Insurance Brokers’ Association today published the results of their annual survey of global trade credit insurance claims, conducted by A2Z Risk Services. 

The survey shows that: 

• A total of 136 claims were payable in 2025, down from 185 in 2024. However, the aggregate value of claims rose to US$438.5 million, an increase of almost US$38 million year-on-year.  

• Only three claims, representing just over 2% by number and around 3% by value, were paid after the contractual deadline, due to payment processing issues rather than disputes over coverage. In addition, a small number of claims were affected by ongoing sanctions-related clarifications, with insurers working to meet their regulatory obligations where required. 

• Africa remained the largest source of claims by volume, accounting for 63% of all claims. However, Europe accounted for the highest proportion of claims by value, representing more than a third of total amounts paid. The Americas accounted for 13% of claims, while Asia represented 7%. 

• The public sector continued to see more claims than the private sector, with 65% of claims coming from the public sector. However, with higher average claim values in the private sector, the total amounts paid were significantly higher: 67% to the private sector and 33% to the public sector. 

David Powell, Head of Technical Underwriting at the Lloyd’s Market Association, said: “Trade credit insurance remains a vital enabler of global trade. While the number of claims fell in 2025, the increase in overall claim values underlines the importance of robust underwriting and long-term capacity to support complex transactions. 

“The data also demonstrates the continued reliability of the market. Even where payments are delayed due to operational or regulatory complexity, insurers are working to ensure that valid claims are ultimately settled.” 

Joe Shaw, Director of Claims at the International Underwriting Association, said: “Trade credit insurance supports economic growth by enabling exporters and lenders to extend credit with confidence and to access financing on better terms. The survey results once again show that the London market delivers dependable outcomes for policyholders across a wide range of geographies and sectors.” 

Jacqueline Girow, Executive Director at the London & International Insurance Brokers’ Association, said: “For brokers and their clients, these findings reinforce the value of trade credit insurance as a practical risk management tool in an uncertain trading environment. While exposures are becoming larger and more complex, the survey shows that the market continues to respond consistently when claims arise, providing the certainty and reliability that people depend on.” 

Notes to Editors 

Media relations contacts 
 
LMA: 
Carole Porter, Head of Marketing and Communications | +44 20 3307 3947 | Email: carole.porter@lmalloyds.com 

IUA: 
Scott Farley, Director of Communications | +44 020 7617 4449 | Email: scott.farley@iua.co.uk 

Omnia Partners: 
Victoria Sisson, Director | +44 794 129 4872 | Email: victoria.sisson@weareomniapartners.com 

Notes 

The above release is not a recommendation to buy comprehensive non-payment insurance. Clients should seek advice on their specific requirements from an appropriate intermediary.  

About the Lloyd’s Market Association 

The Lloyd’s Market Association (LMA) exists at the very heart of Lloyd’s, a world-leading global marketplace for complex risk where solutions to challenges are delivered every day. 59 Lloyd’s managing agents and members’ agents are members of the LMA. 

We represent our members’ interests to organisations including governments, regulators, and the market’s central supporting body, the Corporation of Lloyd’s. We provide professional and technical expertise in areas ranging from model policy wordings to the implementation of innovative technologies. We connect with our members to identify and resolve issues facing the market, and work in partnership with Lloyd’s and the other market associations to influence initiatives and outcomes. We operate the market’s most comprehensive technical education service, the LMA Academy. For more information visit: www.lmalloyds.com. 

About the IUA 

The International Underwriting Association of London (IUA) is the representative body for companies in London providing international and wholesale insurance and reinsurance coverage. Its mission statement is to secure an optimal trading environment for London insurance companies. 

About LIIBA 

The London & International Insurance Brokers’ Association represents the interests of Lloyd’s insurance and reinsurance brokers operating in the London and international markets. 

The Annual Trade Credit Claims Survey, undertaken by A2Z Risk Services Ltd, on behalf of the Lloyd’s Market Association (LMA), the International Underwriting Association (IUA) and the London & International Insurance Brokers’ Association (LIIBA), provides valuable insight into claims activity across the trade credit insurance market.

This year’s report highlights continued high levels of claims performance across the market. The findings reflect trends in obligor type, industry sector, geographical region and exclusions, offering a comprehensive view of market behaviour and claims handling practices.

The survey aims to improve transparency, support market understanding and inform future underwriting and claims strategies.

This page sits under the Political Risk, Credit and Financial Contingencies Panel section and forms part of the LMA’s ongoing commitment to supporting the trade credit and political risk community.

Download the 2026 Trade Credit Claims Survey results