Reinsuring pandemics: the role of government and public–private partnerships between reinsurers and governments

Senara Eggleton*, Ozlem Gurses

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)
52 Downloads (Pure)

Abstract

Pandemic-related business interruption (BI) losses are generally considered ‘uninsurable’ because, in order to pool sufficient premium revenue to meet valid claims, premiums would be unaffordable for the majority of policyholders. This paper explores whether and how such losses might be made insurable in the U.K. The authors consider post-pandemic governmental responses, including the role of the Financial Conduct Authority (FCA) and the meaning and implications of FCA v Arch Insurance (U.K.) Ltd ([2021] UKSC 1). The central premise of the paper is to highlight the importance of reinsurance in increasing an underwriter’s insuring capacity and to illustrate how, with the support of government in the form of a public–private partnership (PPP), ‘uninsurable’ risks of this type may be made insurable. The authors propose a PPP, ‘Pandemic Business Interruption Re’, which provides, in their view, a feasible and defensible solution that would confer the benefit of increasing policyholders' faith in the industry's ability to underwrite pandemic-related BI claims and reduce reliance on ex post government aid.

Original languageEnglish
Pages (from-to)552-576
Number of pages25
JournalThe Geneva Papers on Risk and Insurance—Issues and Practice
Volume48
Issue number3
Early online date17 Feb 2023
DOIs
Publication statusPublished - Jul 2023
Event19th Joint Seminar of the European Association of Law and Economics and The Geneva Association: Pandemics – Liability and Insurance - University of Vienna, Vienna
Duration: 23 Jun 202224 Jun 2022

Keywords

  • Business interruption insurance
  • Covid-19
  • Public private partnerships
  • Systemic Risks
  • Reinsurance

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