FERMA has welcomed the report just published by the European insurance authority EIOPA on a pandemic resilience scheme and urges the European institutions to act on its ideas.
EIOPA’s Issues Paper on Shared Resilience Solutions for Pandemics proposes options for public-private partnerships to be explored at national and European level. It is based on the views of representatives of commercial insurance buyers through FERMA, (re)insurers and brokers at European level.
EIOPA’s principal aim is to address the near total absence of risk transfer for non-damage business interruption losses (NDBI) for systemic risks, as FERMA proposes in its Resilience Framework for Catastrophe Risks.
FERMA believes that a public-private insurance-based solution, based on a sound foundation of risk management, is essential to support European enterprises against pandemic. It also argues that, even though there is action in some member states, European-level involvement is necessary to create resilience across the Single Market. Pandemic has no borders.
Only an insurance-based public-private partnership can provide appropriate incentives for companies to apply modern risk management / loss prevention tools that can respond to exceptional risks. This will contribute significantly to the overall recovery from the current pandemic and resilience to future catastrophic events.
For such a scheme to work, FERMA states, the EU must be involved. It needs to coordinate and insure minimum standards of national schemes across Member States. The EU should also establish an expert group for the necessary data sharing and risk modelling, as EIOPA suggests. Ultimately, a European financial backstop is likely to be necessary. At the same time, FERMA wants to see the EU promote risk management at enterprise and national level. Only by doing this, will we strengthen our resilience to catastrophic risks.