Marsh tells US Congress it can help create TRIA-style pandemic pool

John Doyle, president and CEO of Marsh and vice-chair of Marsh & McLennan Companies (MMC), has written to Congress leaders and the US administration, offering to help create a pandemic risk insurance programme that would help the US economy recover from Covid-19 and be far better prepared for any future outbreak. Marsh’s bid to create a government-backed scheme to cover future pandemic risks comes as leading European risk managers told Commercial Risk Europe they would support any similar initiatives in Europe. Mr Doyle told Congress leaders that Marsh has spoken to policyholder representatives, as well as leading insurers and reinsurers in the US that would support the creation of a programme similar to the Terrorism Risk Insurance Program (TRIP) created following the introduction of the Terrorism Risk Insurance Act (TRIA) in 2002. “The basic framework of a pandemic risk insurance programme would be to structure a risk-sharing model between policyholders, insurers and the federal government. As with traditional policies, policyholders would absorb initial losses up to specified deductibles. Insurers would then provide business interruption coverage between that threshold and a higher limit. The federal government would then backstop the overall programme by bearing a portion of the damages above a certain level,” explained Mr Doyle. In his letter to Nancy Pelosi, speaker of the House of Representatives, and other leaders of the house, Mr Doyle wrote: “On behalf of our 76,000 employees at Marsh & McLennan, I am writing to offer our assistance in developing a pandemic risk insurance programme that will serve two vital national interests: (1) accelerate the recovery of the United States economy in the summer and fall of this year; and (2) protect against another pandemic in the near future.” He added: “The stakes for businesses, their employees and the economy are simply too high to defer action in addressing pandemic risk exposure. Accordingly, the time is now to structure a public-private partnership with input from policyholders, insurers and the federal government.” Mr Doyle pointed out that MMC has expertise in pandemic risk. The broker helped the World Bank structure the first-ever pandemic risk bonds in 2017, and a year later developed PathogenRX. It provided pandemic business interruption coverage for key industries such as aviation, construction, gaming, hospitality, retail and tourism. Mr Doyle listed the core benefits of pandemic insurance for businesses and organisations of all types and sizes across the US as: -Facilitating access to capital from lenders, and the equity markets, that will require assurance against future pandemic risks -Establishing a viable insurance market for pandemic risk with sufficient, affordable capacity -Creating greater certainty for businesses and their employees during a recurrence or future pandemic -Enhancing the resilience of the US economy and its capacity to bounce back more rapidly from a future pandemic event. Mr Doyle said Marsh has used its risk-modelling capabilities to analyse data from past pandemics, including MERS, SARS and ebola. It has, not surprisingly, found that given the magnitude of the Covid-19 exposure and current capital levels in the industry, the private insurance sector does not have the risk-bearing capacity alone to manage this peril. “There are certain risks, like terrorism, that require the full weight of the United States government to manage in partnership with the insurance industry. A public-private partnership is therefore critical to ensuring all businesses and organisations have the ability to manage this risk prospectively,” said Mr Doyle. “Over the past two weeks, we have conferred with trade associations representing policyholders across industry sectors of the US economy to better understand their needs. We have also spoken directly with executives of leading property and casualty insurers. Naturally, the precise contours of the programme, including trigger points and limits, will need to be developed in close collaboration with these stakeholders and the federal government,” continued the letter. “In the attacks on 11 September 2001, our company lost nearly 300 employees. In the months thereafter, we played an important role in helping policyholders, insurers and the federal government develop the original Terrorism Risk Insurance Act of 2002. As our nation, and the world, confront an unprecedented pandemic and the resulting economic fallout, we are eager to contribute and to support your efforts to lead the way forward,” concluded Mr Doyle.

Marsh tells US Congress it can help create TRIA-style pandemic pool

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