Munich Re Specialty – Global Markets Syndicate, the managing agent of Lloyd’s Insurance & Reinsurance Markets Syndicate 457, has formed the Pandemic Alliance to provide parametric catastrophic infectious disease insurance.
The consortium, a market initiative from Lloyd’s London-based company, will provide proactive emerging risk transfer solutions to protect against the impact of epidemic and pandemic risks.
Under the new initiative, coverage can be triggered by three objective data points: WHO reports a new outbreak; WHO declares a public health emergency; and civil authorities issue restrictions for the disease in the coverage area.
Munich Re noted that many businesses around the world have policies that do not provide protection against this risk and that without the solutions provided by the consortium, they will face coverage gaps. Meanwhile, modeling experts such as Metabiota and Airfinity warn there is an almost one-in-three chance of another pandemic on the scale of COVID-19 happening again within the next decade.
Dominick Hoare, Chief Underwriting Officer, Global Markets Specialty Insurance Group, Munich Re, said: “While for many people, COVID-19 Still a vivid memory, the risk of future global epidemics and epidemics remains high. This innovative insurance solution was developed with the support of our partners to help businesses better prepare for and respond to these risks. Its transparent triggers and rapid payouts when these triggers are met demonstrate how the insurance industry can proactively provide effective solutions to help the economy stay on track despite public health disruptions.”
The Pandemic Alliance will benefit from the experience and expertise of Munich Re’s Pandemic Risk Solutions unit, which has representative offices in London, Munich and Singapore. The unit has underwritten risks since 2017 and will provide expertise, aggregation guidance and underwriting rigor to the new syndicate.
Dr. Gunther Kraut, Global Head of Pandemic Risk Solutions at Munich Re, said: “The Munich Re ERS team is proud to leverage our long-standing expertise and knowledge of epidemic and pandemic risks to support the Pandemic Alliance. Expanding the reach and distribution of this expertise through the Alliance’s alliance partners will help businesses better plan and prepare for future risks, while enabling a sustainable approach to overall capabilities to manage this challenging risk.”
The reinsurer explained that the new consortium will also play an important role at the national level, citing the report of the G20 High-Level Independent Panel on Financing the Global Commons for Epidemic Preparedness and Response, which recommended expanding business interruption insurance to increase economic stability and free up government resources for epidemic preparedness and response.
