Parametric type cover suggested as a solution
Debate is growing about how the state and insurers can jointly offer mass business interruption during pandemics - with latest suggestions around a parametric solution.
Aon’s head of innovation Kurt Cripps said insurance firms could use public data on the number of deaths inflicted by a pandemic to trigger an automatic fixed payout on such policies.
This parametric solution would mean quicker payments to firms, who would otherwise have to wait around for loss adjusters and claims assessment, reports The Telegraph.
Steve McGill, former President of Aon and now chief executive of Warburg Pincus-backed boutique broker McGill and Partners, stressed that a pandemic solution must have state involvement with insurers otherwise it could ‘overwhelm’ the industry.
“A broad-based solution would probably need to come from a combination of government support with the support of the insurance industry, just like what happened with terrorism after 9/11,” he said.
The chief executive of one London-listed insurer was reported as saying: “People are asking [for pandemic cover] but nobody’s getting it.”
“We are always happy as insurers to take uncorrelated events. The whole theory of insurance is that the losses of a few are paid for by the many. The stresses come where – like today – many people have losses and there are not enough unaffected people [to pay for them].”
Last week, the ABI said it was ready for a debate with the government on pandemic solutions.
Insurers have been under fire over not paying on business interruption, with one MP vowing to take the matter to Downing Street following insurers ‘unacceptable’ behaviour.
Insurers have stressed that pandemics are not generally covered, with exclusion clauses in contracts.
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