Pandemic threat and coverage for business interruption with no material damage

Since the emergence of the COVID-19 crisis, insurers have been called upon to compensate customers.

business interruptionApart from event cancellation, sickness and life claims, they are faced with an unprecedented upsurge in claims.

Business interruption coverage without material damage has created a conflict between insurers and policyholders. Such trusting issues and misunderstandings between the two parties could highly impact the market.

Aiming at solving this problem and finding a permanent solution, the French Insurance Federation (FFA), is considering the implementation of a compulsory health disaster coverage. Such a wide coverage would extend to business interruption and would include risks other than the pandemic.

The United Kingdom has also begun discussions on the development of a future pandemic plan, aiming at improving the management of future crises. Lloyd's plans to create a "Recover Re" type vehicle that provides a coverage for business interruption due to epidemics.

In addition to this, a group of British insurers involving Convex, Aviva, RSA has set up a reinsurance programme called "Pandemic Re" which is believed to receive government support.

Read also | Insurance and pandemic threat

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