Munich Re Specialty – Global Markets, Syndicate, managing agent of Syndicate 457 at the Lloyd’s insurance and reinsurance marketplace, has established The Pandemic Consortium, designed to offer parametric catastrophic communicable disease insurance.
The consortium, a Lloyd’s market initiative based in London, will offer a proactive emerging risk transfer solution to protect against the impacts caused by pandemic and epidemic risks.
A news report from Reinsurance News, an industry-focused online medium, indicated that under the new initiative, coverage can be triggered by three objective data points, namely WHO report a new outbreak; WHO declare a public health emergency; and civil authority restrictions are issued in relation to the disease within a covered area.
Munich Re noted that many businesses around the world were not protected against this risk in their insurance policies and faced a protection gap without the solutions provided by the consortium.
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The new initiative of the reinsurance company comes as modelling experts such as Metabiota and Airfinity warn of a close to one-in-three chance of another pandemic on the scale of COVID-19 within the next decade.
Commenting on the launch of the Pandemic Consortium, Group Chief Underwriting Officer, Munich Re Specialty – Global Markets, Dominick Hoare, said: “While COVID-19 remains a vivid memory for many, the risk of future pandemics and epidemics globally remains high. This innovative insurance solution, developed with the support of our partners, is designed to help businesses better prepare for and respond to these risks.
“Its transparent triggers and rapid payouts once these triggers are met demonstrate how the insurance industry can proactively deliver effective solutions to help the economy stay on track amidst public health disruptions”, the industry expert added.
According to the company, the Pandemic Consortium will benefit from the experience and expertise of Munich Re’s Epidemic Risk Solutions unit, represented in London, Munich, and Singapore, and which has been writing risk since 2017, and provide expertise, aggregation guidance, and underwriting rigour to the new consortium.
In his remarks, Global Head of Epidemic Risk Solutions, Munich Re, Dr. Gunther Kraut, said: “The Munich Re ERS team is proud to support The Pandemic Consortium with our longstanding expertise and knowledge in epidemic and pandemic risk. Expanding the reach and distribution of this expertise through the Syndicate’s consortium partners will help businesses better plan and prepare for future risks – while at the same time enabling a sustainable approach to managing aggregate capacity for this challenging risk.”
The reinsurer explained that the new consortium will also be relevant at a national level, citing the G20 High Level Independent Panel on Financing the Global Commons for Pandemic Preparedness and Response report, which recommends expanding business interruption insurance to improve economic stability and free up government resources for pandemic preparedness and response.
