From Artemis, June 12:
The insurance and reinsurance industry in Germany has reportedly come together to discuss and strategise the launching of a EUR 10 billion pandemic risk fund, to provide risk capital in the event of future pandemics, with insurance-linked securities (ILS) one of the funding avenues being explored, it has been reported.
First reported by German newspaper Der Spiegel this morning, followed by Reuters, the initiative sees collaboration from insurance and reinsurance stakeholders in the country.
We understand that participants are seeking a public-private solution and are realistic enough to acknowledge that re/insurers alone cannot provide the private capital such a risk fund or pool would require.....MUCH MORE
As a result catastrophe bonds are being discussed, as part of the early explorations being coordinated by German insurance industry association the GDV.
The moves join other international initiatives to establish pandemic risk insurance backstops and risk pools, to provide extra capacity to ensure pandemic risk protection can be more all-encompassing and responsive should future pandemic outbreaks arise.
The German initiative is quite forward-thinking, it seems, with participants suggesting that in order to protect against the risk of future pandemics, a coordinated response by government, the insurance and reinsurance industry, as well as the capital markets is required....
If interested see also:
Re/Insurance: "Berkshire Hathaway will write pandemic cover 'at the right price', Buffett says" (BRK)
As with terrorism insurance Warren would rather that governments take the risks,* the downside is just so huge....
Insurance Trade Groups: "Pandemics simply are not insurable risk..."
Whitney Tilson: "Berkshire's Exposure To Business Interruption Insurance" (BRK)
Insurance:"Anticipated Coronavirus Claims Scenarios Across Major Coverage Lines"
P&C: Business Interruption Insurance—Here Come the Lawyers
Insurance Oh-Oh: "French court orders insurer to pay restaurant’s business interruption losses from coronavirus".
Travelers Insurance Is Suing Its Customers To Preempt Business Interruption Claims (TRV)
Insurance: "Coronavirus to be largest industry loss ever: Chubb’s Greenberg & Lloyd’s Neal"
The last line is:
"Lloyd’s has set aside £15 million to fund research into how pandemics and other big events can be better dealt with in future."As the kids say: "You had one job..."
Re/Insurance: "Pandemic could inflate hurricane industry losses by up to 20%..."
Of course the jackpot for risk modelers is to have a volcano go off triggering an earthquake leading to the collapse of an underwater seamount, causing a tsunami as a hurricane roars through a pandemic zone.
Most likely location for this unlikely occasion: the Lesser Antilles.
Unlike Fukushima, no nukes though.
So it would be hard to recreate the typhoon approaching the nuke plant devastated by tsunami caused by the earthquake* but, but volcano and pandemic!
I believe for the remainder of 2020 our motto should be "Hey, it could be worse!""
