categorytitle / Research Update .
  • time : 10:51:35
  • Date : Sat Apr 10, 2021
  • news code : 4721
Responding to COVID-19 and Pandemic Protection Gap in the Insurance Industry
Coronavirus pandemic and the measures taken for reducing its spread have exposed economic activities with massive disruption and an increased income decline. While the majority of enterprises lack any type of business interruption protection, many carriers do not offer cover for such losses, hence giving way for the states and legal authorities to take such roles, according to PRIAO, IRC.

Given the experiences achieved through the catastrophe risk insurance coverage, in order to explicate the state support in offering business interruption protection against pandemic risk, the research report “Responding to the COVID-19 and Pandemic Protection Gap in Insurance” was translated by Mr Sajjad Farazmand, IRC Researcher, with the collaboration of Dr. Leyli Niakan, Fellow at Macro Insurance Studies Research Group, IRC. The report was originally published by OECD in September 2020. It reviews the initial responses to the coronavirus protection gaps in various countries across the world and presents the challenges and considerations for tackling relevant barriers.

The report also addresses the potential capacities for covering business interruption and long- and short-term solutions for filling such protection gap. Further, it focuses on the potential features of developing pandemic risk coverage and reviews some of the initiatives undertaken by some European countries including France, Germany and UK, and the U.S. The appendices include the following headings: Overview of catastrophe risk insurance programs, Achieving broad coverage for targeted peril(s), Improving the affordability of coverage, Limiting public sector exposure, Providing incentives for risk reduction (directly or indirectly).

The report findings highlight the fact that in order for the states to develop a pandemic risk insurance coverage that not only offers broad coverage but reduces the state risks, the potential features of developing pandemic risk insurance coverage must be taken into account. These features include: Broad coverage, potentially through automatic coverage extensions, limiting public exposure by leveraging available private sector capacity, providing incentives (or requirements) for risk reduction, considering whether insurance is the most efficient mechanism, and offering various forms of financial supports for covering COVID-19 financial outcomes.

Those interested can access this report in the following web address: http://www.irc.ac.ir/fa-IR/Irc/4946/Articles/view/14643/1290.

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