The recent virus outbreak has caused companies and organizations to cancel or postpone their events. These entities now scamper to find insurers that provide pandemic coverage, in light of possible losses and decrease in revenues, reported NBC News.
Axel Rakette, a representative for Germany-based reinsurance company Much Re, said that insurers are noticing an increased demand for insurance that covers the recent virus pandemic. However, Rakette noted that such a policy is not “a common product – yet.”
Munich Re is one of the insurers of the recently postponed Tokyo Olympics. Three years ago, it assembled a team of experts in epidemiology, statistics, risk modeling, claims management and finance. The team worked to develop different options for entities in case of cancellation or postponement due to various reasons. Epidemics and pandemics are included in their research.
The reinsurer made this move because of the “greater frequency” of outbreaks, according to Rakette.
NBC News emphasized that event cancellations are usually protected by insurance. The difference lies in the stipulations. Typically, insurers cover several causes for cancellation or postponements. However, the average insurance policy does not include communicable diseases and outbreaks.
What they offer instead is “restricted coverage for epidemics or pandemics as a buy-back.” This is sold at a higher premium, which is why many companies prefer not to take out such policies. MDD Forensic Accountants partner Paul Isaac noted that the continued spread of the viral infection means that entities without pandemic coverage are likely to suffer exposure and impact.
According to Isaac, who works for a company specializing in quantifying damages, assessing the effect of the pandemic would only be apparent after the virus outbreak shows its full impact on the business industry. He also noted that large events could be able to acquire such insurance, but smaller organizers could not.