Life in the pandemic risk pool yet

Europe’s risk and insurance managers should be disappointed to see the lack of progress made with the proposed creation of public-private partnerships (PPPs) to cope with future health crises, after the failure of standard business interruption coverage to rise to the challenge. As lockdowns took hold across Europe and globally in the spring of 2020, and people realised that insurers could not and would not bail them out, governments had to step in with taxpayer-funded support schemes. These schemes – known as furlough in the UK – were a welcome relief for the millions who were forced into unemployment but still had bills to pay and families to feed. Personal experience showed that for many this was in fact a period during which they could take a long break from work on 80% pay and get lots of jobs done around the house and garden that were long overdue. For others, it was a nightmare as they or their businesses did not qualify for funding because they had not filed enough tax returns and the like, and bankruptcy loomed as they read about the billions of pounds of funding that the government was paying out to fraudsters claiming for fictitious employees, and companies or employees who never actually received the money. There will always be victims during a crisis of course and this was no different. Nobody really expected this crisis and governments and businesses had to react as it unfolded. Overall, it has to be said that Europe and the world has actually weathered this storm quite well from a macro perspective. But lessons need to be learned from such crises, and risk mitigation, management and transfer solutions need to be adopted to ensure that next time, the pain is not quite so great. This is why it is so important for everyone in the risk and insurance management sector to not forget about the idea of the PPP structures to cope with future health crises and other uninsurable systemic risks (not least cyber) as we ‘return to normal’. For this reason, it was good to see the outgoing chairman of Generali, Gabriele Galateri di Genola, bring up the topic again with senior European Commission (EC) officials at the recent Politico Finance Summit 2022 in Paris. He for one has clearly not given up on the idea, which Generali first proposed back in 2020. During the event, Galateri spoke with the European Commissioner for Financial Services, Mairead McGuinness, on Solvency II revision, financial education and systemic-risk coverage. “I am happy to see that in the European context there is talk of objectives to be achieved in terms of green, education and innovation: we must invest more in the real economy and support investments in strategic sectors, such as infrastructure, with patient and long-term capital,” said Galateri. “What Generali has proposed is a pandemic fund that can have the capacity to answer to the requirements of the market. Insurers, reinsurers, financial markets, national governments and the EU can take part. The future in a global world cannot be mastered by only one actor,” he added. When Generali first proposed the Pandemic Risk Pool, it did so through a memorandum of understanding signed with Eurochambres, the European organisation of chambers of commerce and industry that represents more than 20 million businesses – of which, over 93% are small and medium-sized enterprises – across 43 different European countries. This was a wise move because if the EC or any national government is going to seriously consider such proposals, it will need a united front of interests from across the economy – both private and public. These proposals will also need a firm commitment to the promotion and reward for risk mitigation, management and retention for the beneficiaries. Cash-strapped governments will not accept simple bailout funds to tax breaks without skin in the game. Clearly, the EC and Europe’s national governments have a lot on their plates currently. But it was good to see Generali’s chairman take the opportunity offered by this high-level conference to remind those that matter that this important topic should not be brushed under the carpet, leaving future generations with another big mess next time.

Life in the pandemic risk pool yet

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