Thomas Buberl, Chief Executive Officer (CEO) of AXA, has said that the company is “ready to take the initiative” to work with governments to develop a risk pooling scheme for pandemics.
Speaking in an interview with Le Journal du Dimanche, Buberl said that the industry needs to think about creating a pooling mechanism that can accompany health crises such as the coronavirus (COVID-19) outbreak.
He proposed that AXA and others could work with the French government and other European states to create a pandemic insurance scheme to cover these health catastrophes, inspired by the one that already exists for natural disasters.
This could be owned 50% by the government and 50% by a pool of private insurers, with premiums collected each year and set aside as a reserve.
In the event of a crisis, insurers would pay up to two to three times the amount of the premiums, with the state taking over beyond that, Buberl explained.
“I am going to take initiative to move in this direction,” he told Le Journal du Dimanche. “But much more will also have to be done in terms of prevention.”
“One of the lessons of this pandemic is that the world was not sufficiently prepared and did not coordinate enough. With global warming in particular, we have major disruptions before us that require great preparation and coordinated action at the global level.”
Asked how the insurance market will evolve in the coming months, Buberl was quick to identify the importance of healthcare coverage, which he sees as “a major step into the future.”
In Asia, for example, the demand for health products is already growing by more than 200%, while AXA’s teleconsultations in France have gone from 6,000 per month to 3,000 per day in the crisis.
Beyond the overall impact of the economic crisis, Buberl noted that AXA will see some depreciation of its financial investments due to COVID-19, in line with the sharp decline in equity values.
The company will also face claims related to illnesses, deaths or cancelled events, he said, as many of AXA’s clients will be protected against the pandemic to some extent.
“When you took out health or death insurance, you were covered. Events are also covered in case of cancellation or postponement,” he explained. “For example, our subsidiary AXA XL was one of the insurers for the Tokyo Olympic Games, which have been postponed.”
A company can also be insured against the risk of business interruption due to an epidemic, although AXA believes that it is quite rare for a company to take out this type of insurance.
“On the other hand, we cannot cover all uninsured losses caused by confinement,” Buberl added. “The insurance industry would put itself at risk if it paid for a claim for which no contributions were made.”