The Federation of European Risk Management Associations (FERMA) announced the launch of a task force to create proposals to address the issue of business interruption coverage for catastrophic risks.
“Our aim is to support the creation of economies that are resilient in the face of systemic and catastrophe risks,” said the president of FERMA, Dirk Wegener.
The task force, made up of senior risk managers from FERMA member associations in Europe, plans to publish its initial results by the end of May. FERMA wants to open a dialogue with all relevant stakeholders, including EU institutions, insurers and brokers, and government bodies.
FERMA calls for a discussion among these stakeholders to create a holistic solution that provides cover for non-damage business interruption for all types of catastrophe risks, not just pandemic.
“FERMA’s member associations are composed of people with great knowledge of business risk management and business insurance. We intend to draw on that expertise to make concrete proposals to form the basis of discussions with stakeholders,” said Wegener.
FERMA argues that the impact of catastrophe events, like the current pandemic, are beyond the resources of the private insurance industry and enterprise risk management alone.
FERMA has previously recommended the creation of public-private partnerships for pandemic risk on a national basis throughout the member states of the European Union, similar to what already exists to cover extraordinary catastrophic risks, such as terrorism.
In a separate move, UK insurance industry leaders have formed a steering group that will work with terrorism reinsurer Pool Re, with the objective to ensure that, working alongside the industry to support customers and communities in the current crisis, the industry can strengthen its response to future pandemics.
The UK group is chaired by Stephen Catlin, chairman and CEO, Convex. Initial members of the group are: Maurice Tulloch, CEO of Aviva; Stephen Hester, CEO of RSA; Julian Enoizi, CEO of Pool Re; Nick Frankland, UK CEO Reinsurance Solutions, Aon; James Nash, CEO, International, Guy Carpenter; and James Kent, CEO of Willis Re.
The absence of business interruption cover without a requirement for physical damage – or non-damage BI – is a critical issue, which affects all sizes of business, especially small-and-medium-sized enterprises (SMEs),” said FERMA in a statement.
“Any catastrophe mechanism for business interruption must be able to respond to various types of disaster, address the complexities of catastrophes and avoid the pitfalls of existing schemes,” added Wegener.
FERMA notes that business interruption insurance typically requires some form of physical damage, such as from fire or flood, to trigger the cover. Many policies have exclusions for non-damage business interruption for infectious diseases.
Source: Federation of European Risk Management Associations
*This story ran previously in our sister publication Insurance Journal.