Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/288716 
Year of Publication: 
2020
Citation: 
[Journal:] The Geneva Risk and Insurance Review [ISSN:] 1554-9658 [Volume:] 45 [Issue:] 2 [Publisher:] Palgrave Macmillan UK [Place:] London [Year:] 2020 [Pages:] 171-199
Publisher: 
Palgrave Macmillan UK, London
Abstract: 
This paper analyzes the insurability of pandemic risk and outlines how underwriting policies and scenario analysis are used to build resilience upfront and plan contingency actions for crisis scenarios. It then summarizes the unique “lessons learned” from the Covid-19 crisis by baselining actual developments against a reasonable, pre-Covid-19 pandemic scenario based on the 2002 SARS epidemic and 1918 Spanish influenza pandemic. Actual developments support the pre-Covid-19 hypothesis that financial market developments dominate claims losses due to the demographics of pandemics and other factors. However, Covid-19 “surprised” relative to the pre-Covid-19 scenario in terms of its impact on the real economy as well as on the property and casualty segment as business interruption property triggers and exclusions are challenged, something that may adversely impact the insurability of pandemics as well as the perception of the industry for some time to come. The unique lessons of Covid-19 reinforce the need for resilience upfront in solvency and liquidity, the need to improve business interruption wordings and re-underwrite the book, and the recognition that business interruption caused by pandemics may not be an insurable risk due to its large accumulation potential and the threat of external moral hazard. These insurability limitations lead to a discussion about the structure and financing of protection against the impact of future pandemics.
Subjects: 
Financial crisis
Covid-19
Pandemic risk
Resiliency
Insurability
Risk management
JEL: 
G01
G22
G32
H12
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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