The insurance industry, policyholders and governments throughout the world must come together on an approach that offers relief to those who need it now and develop a plan to implement mitigation strategies and a response mechanism for future pandemic events. The scale of this exposure is immense and far beyond the financial capabilities of the insurance industry alone. A public-private solution is necessary to address this risk.
The public-private partnership model is one that has worked particularly well to date for other risks that are capable of causing systemic economic shocks, such as terrorism. The Terrorism Risk Insurance Act (TRIA) and Pool Re are two fine examples where the security of backing from central governments has allowed private carriers to offer comprehensive terrorism policies at affordable costs. Whatever model is pursued for pandemics, COVID-19 has shown that any viable, long-term solution requires government participation.
Dan Glaser, Chief Executive Officer of Marsh & McLennan, authored a recent article in Fortune, discussing how a strong pandemic insurance system can make us more resilient to risk and avoid the panic-neglect cycle — and inspire more economic confidence into the future. Guy Carpenter is a business of Marsh & McLennan.
Guy Carpenter is fortunate to be able to bring the power of Marsh & McLennan Companies to bear through this process by working closing with Marsh and Oliver Wyman to understand the impact on the primary market and wider financial system. Marsh & McLennan Companies is at the forefront of conversations to create a forward-looking (re)insurance solution for pandemic risk in conjunction with policyholders, insurance markets and key policymakers.
A version of this article previously appeared in Fortune.