Proposals include solutions for non-damage business interruption and systemic catastrophe events
Airmic has welcomed Lloyd’s proposals for how the insurance industry can support global economic and societal recovery from the impacts of COVID-19, and to build resilience for future systemic catastrophic events.
Lloyd’s has outlined three open source frameworks to help build future resilience through innovative partnerships and products together with a Centre of Excellence to better understand, model and provide insurance for systemic catastrophic events.
The solutions and frameworks, developed in conjunction with our UK and Global Advisory Groups, are detailed in the insurance market’s report “Supporting global recovery and resilience for customers and economies: the insurance response to COVID-19”.
’ReStart’ is a potential non-damage business interruption solution (loss of revenue without a physical damage trigger) for future waves of COVID-19 being developed by the Lloyd’s market, which specifically focuses on supporting SMEs. The solution is focused on giving certainty of non-damage business interruption coverage initially to UK SMEs by pooling limited capacity across a number of Lloyd’s market participants.
‘Recover Re’ sets out a proposed ‘after the event’ insurance product framework, that could provide immediate relief and cover for non-damage business interruption over the long-term, including the current COVID-19 pandemic. If implemented, it could be an efficient way to inject commercial and government funds into the economy, providing relief to customers with limited borrowing capacity, argues Lloyd’s.
‘Black Swan Re’ is a reinsurance framework for government and industry partnership that could better protect customers from the devastating and long-term impacts of systemic catastrophic events – from another pandemic, or global supply chain disruption, to the interruption of critical infrastructure or utilities.
In a statement, Airmic said:
“Lloyd’s proposals address the fact that businesses are facing very acute and immediate challenges from the impact of the global pandemic while also considering the medium and long-term insurance challenges that the pandemic has exposed.
“We are very much at the beginning of the crisis, and businesses need practical support and insurance solutions for potential future waves and unexpected consequences of this virus and Lloyd’s has shown leadership in proposing practical solutions.
“We welcome the fact that the report also looks beyond the pandemic and addresses the need to find a framework for coping with the devastating and long-term impacts of systemic catastrophic events.
“The proposed solutions are the product of broad thinking and extensive consultation with Lloyd’s customers, including those represented by Airmic, the insurance market and government.
”This collaboration is welcomed as it is vital during such a far-reaching crisis. Only by working together will we emerge from the pandemic stronger, and Airmic is looking forward to working with Lloyd’s in turning this into a reality.”