Property and casualty market head says this could be ‘a very valuable product’ moving forward
Contingent business interruption (BI) products, “which [have not] really been an offering from the insurance industry” so far, could become “a very valuable product” if the insurance and reinsurance industry can capitalise on the coronavirus-linked BI fallout to create new propositions.
This is according to reinsurer Swiss Re’s market head for property and casualty in the UK and Ireland, Simon Welton.
He told Insurance Times that contingent BI is “very public at the moment across the world” and that even though it “hasn’t probably really been an offering from the insurance industry” yet, it could be “a very valuable product if we can do something for that”.
Welton added that contingent BI is “an enormous risk”.
He said: “The numbers that we’re seeing for potential BI exposure can range up to trillions and so how we handle it is probably not something that we’re going to do overnight, and whether that actually means some kind of public-private partnership, in many cases as well. That will be something that we need to explore.”
Following on from this, Welton agreed that “Pandemic Re is probably the way forward”, however “that seems to have gone on hold a bit at the moment because there’s literally just so much else going on”.
“As a reinsurer, we’re there to help, but we can’t necessarily be a part of that. But we’re usually very supportive of public-private partnerships,” he added.
Speaking on the FCA’s test case surrounding the interpretation of business interruption policy wordings, Welton said the legal action was “the right thing to do”.
He continued: “Even the FCA made it very clear at the very beginning that the insurance industry did not expect to pick up the bill from a pandemic.”
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