Pandemic Insurance – The Next Big Thing?

Due to the COVID-19 pandemic, businesses and entire industries have been suffering major financial losses over the past few months. A large majority of companies have had to scale their operations back, or shut down completely. Unfortunately, this is partly due to the fact that most businesses weren’t covered for a pandemic or infectious outbreak.

The mounting number of bankruptcies, unemployment, and increasingly strained finances coupled with the drastic drop in consumer demand has highlighted how vulnerable many businesses and organisations around the world actually are when it comes to a pandemic or an outbreak of a contagious disease.

Why are so many businesses not protected against pandemics?

Pandemic insurance is not by any means a standard inclusion when it comes to business insurance. In fact, only a small number of business interruption policies tend to cover disruption from an infectious disease and in these cases, this inclusion is likely to only cover a very localised outbreak. To learn more about the circumstances under which you may be covered for the coronavirus pandemic, read our article ‘COVID-19 & insurance: FAQ’s’.

Previously, there have been very limited pandemic insurance policies available and those that were available, were likely on the more expensive side. This is due to the fact that the risks were difficult to comprehend as well as the fact that they could vary greatly and so, it’s difficult to put a set price tag on something like pandemic insurance.

For example, an insurance product named PathogenRX was launched in 2018. This insurance was designed to cover companies in the USA and Asia in the case of an outbreak of an infectious disease. Sales numbers for the insurance product have been low due to the fact that most business owners deemed it a high-cost expense for something that seemed unlikely to happen. Well, now the very scenario that seemed so unlikely has happened and attitudes are quickly shifting.

So how will this change the insurance industry?

Demand for pandemic insurance is already spiking. Now that so many businesses have felt the full effects of a global pandemic in the 21st century, cover for these kinds of outbreaks will now be a priority for many business owners. We will likely see many big insurance companies developing insurance products similar to that being offered by Marsh, who now say that they have had thousands of inquiries about PathogenRX from various insurance companies and their corporate clients since the COVID-19 pandemic began.

What’s more, a San Francisco company named Metabiota that tracks and models the risk of an epidemic occurring have stated that they have received an inquiry from a hospitality company who are looking for coverage worth “hundreds of millions of dollars”. The head of epidemic risk solutions at Metabiota, Gunther Kraut, has stated that “The impact of the coronavirus provides clear evidence that there is a need for this kind of risk mitigation solution to enhance the economic resilience of company balance sheets”.

Not only have businesses been prompted by COVID-19 to prioritise greater coverage, but the bigger picture also indicates that pandemic insurance is becoming more and more necessary. Statistics show that the severity and frequency of infectious outbreaks are increasing. The Global Virome Project, who work in conjunction with the UN and the World Health Organization, has stated that “threats posed by global pandemics and epidemics are greater than at any other point in human history.”

Considering the data and the facts, it’s very much likely that we are about to see a major increase in both the supply and demand of pandemic insurance with businesses protecting themselves against ever sustaining such extreme economical loss again.

At Allsafe Insurance Brokers, we are experts in helping to make sure that your business is protected in a way that meets the needs of your industry, as well as your budget. To learn more about our services get in touch with us today!