A group of insurance company CEOs have got together to discuss a Pandemic Re insurance fund to cover Pandemic insurance Policies. The thinking is that a fund is formed similar to Pool Re for terrorism, whereby insurers contribute and the government stands behind the fund as guarantor.
Pool Re currently has assets of over £6 billion and covers terrorism and cyber terrorism. The likely costs of a Pandemic Re could be huge , many times this sum, but there is clear need for some sort of insurance and Government support for this risk.
How this would work in commercial property is unclear. Terrorism is usually covered by a landlord's insurance policy under Pool Re and the tenant's rent is suspended following terrorist damage to a building. Could a Pandemic Re fund mean the risk becomes an insurable risk for the landlord like other more normal insurance risks?
Or will a Pandemic Re pool support business interruption policies taken out by tenants, so they would claim the costs of rent they had to pay on commercial buildings through their own business interruption insurance?
We will wait with interest. The group is reporting in the next two months and Amber Rudd is the liaison with Government .
“We have a significant task ahead, although we have received enormous levels of industry support . . . [and] we hope to be able to deliver a structure in a relatively short timeframe.”