Pandemic Updates

Pandemic scope is highly related to overall severity and footprint. Initial impacts are often strains on healthcare systems and deaths in under-insured populations. As the impact on society increases, insured losses follow. Offsetting factors are the natural limits on healthcare systems’ abilities to provide care and the potential for government intervention.

Travel, sports and entertainment are vulnerable as public fear heightens - triggering trip cancellation, business interruption and contingency coverages. Further, exposed healthcare workers and emergency personnel may create workers compensation risks. Post-pandemic, liability claims may be rampant as the courts work out who should have prevented or contained what. In an exceptionally severe pandemic scenario, the benefits of geographic diversification fades and clash risks between lines increases.

Pandemic-related losses are included “silently” in almost all reinsurance coverages. Recoveries depend on the coverage design and whether losses are due to frequency or severity. For example, a life cat treaty will not respond as the hours and radius clauses are meaningless in the context of a pandemic.

The “Protection Gap” for pandemic is huge – for SARS, recoveries didn’t approach a significant fraction of its global economic impact of over US$40B.

Latest Pandemic News

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CDC Covid-19