A top representative from EU regulator the European Commission has called for “caution” regarding the implementation of a public-private insurance scheme to provide coverage for pandemic risk.
John Berrigan, head of financial services at the European Commission, addressed the issue earlier today during an Insurance Europe webinar titled ‘Resilience Lessons from the Pandemic.’
Among his key points, he noted that some EU member states may not be in the position to back the costs of such an enormous enterprise following the financial impact of the pandemic.
“This is a very complex debate and needs time to mature,” Reuters quoted Berrigan as saying.
“I want to urge some caution here when we are looking at the feasibility of any type of action at the EU level.”
What’s more, the European Commission is of the view that more time is needed to evaluate the capability of the re/insurance industry to participate in a state-sponsored scheme, Berrigan added.
Many countries around the world, including the US and UK, are already in the process of reviewing possibilities for a government solution to the problem of pandemic insurance.
But the ongoing COVID crisis means that the progress of these discussions has been slow, and it may yet be some time before all the options can be fully reviewed.
In the meantime, Berrigan said the European Commission and insurance regulator EIOPA will look at the need for simpler and clearer information on products, and what type of policies consumers will need post-COVID.
Also speaking at the webinar, which formed part of Insurance Europe’s Resilience Week, were Allianz Chairman Oliver Bäte, Stéphanie Yon-Courtin, Vice President of the European Parliament’s Committee on Economic and Monetary Affairs, and Alexander Sarrigeorgiou, Chairman of the Hellenic Association of Insurance Companies and chairman and CEO of the Eurolife FFH Insurance Group.
In response to Berrigan’s point, Bäte maintained that re/insurers alone are not capable of providing the capacity necessary to cover a systemic risk such as pandemic, or to pay for the consequences of government-mandated lockdowns.
“We cannot insure a government-induced business interruption policy, it’s just not insurable,” he said, voicing what has become the prevailing sentiment among re/insurers.
“We need to protect our capital very carefully, otherwise the industry is very quickly bankrupt,” Bäte concluded.