”Any catastrophe mechanism for business interruption must be able to respond to various types of disaster” - Dirk Wegener
The Federation of European Risk Management Associations (FERMA) has announced the launch of a taskforce 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 taskforce, made up of senior risk managers from FERMA members, plans to publish its initial results by the end of May. FERMA and the member associations want 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,” said Wegener. ”We intend to draw on that expertise to make concrete proposals to form the basis of discussions with stakeholders.”
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. The absence of business interruption cover without a requirement for physical damage – or non-damage BI – is a critical issue. It affects all sizes of business, but especially SMEs.
Several European countries have existing public-private partnership to cover extraordinary risks. The landscape is diverse and, inevitably, each has strengths and weaknesses. The taskforce believes it will be essential to avoid easy solutions.
“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,” said Dirk Wegener.