Marsh’s Piccolomini says time to act on pandemic solutions

The president of Marsh International, Flavio Piccolomini, believes the time has come to stop talking and act on public-private partnerships to address pandemic risk around the world, or companies will be left trying to build resilience to such ‘black swan’ events with one hand tied behind their back. Opening the OECD’s ‘Addressing the Protection Gap for Pandemic Risk’ two-day online event, Mr Piccolomini said Marsh is working with the OECD and governments around the world – from the EU and the UK, to those in the US and Asia-Pacific – to develop pandemic solutions that will help more rapid economic recovery and build future resilience. He stressed that such solutions are needed because many businesses of all sizes went unsupported during Covid-19, as they “fell through the cracks” of state support mechanisms that were often developed in a hurry. Discussion has therefore turned to private-private partnerships – involving governments, the insurance industry and companies – to build systems that will avoid this happening again. But Mr Piccolomini said these have yet to bear fruit and the time has come to turn words into action. “Even as we meet today, there are no national instruments in place that will address future pandemics, which means that businesses all across the globe face uncertainty in the mid to long term,” he said. “We are increasingly hearing from the companies we speak to that they want to embed resilience to black swan events into their business models. But without more structured support, they will start this process with one hand tied behind their backs,” he continued. “Let’s use the momentum we have today. The time has come to move from discussion and debate to taking action. Together, we can bend the risk curve for pandemics,” he added. The Marsh exec said the magnitude of pandemic risk means the private sector cannot shoulder the burden alone. The last year has demonstrated that traditional insurance solutions cannot fully provide businesses with the protection they need against the enormous costs of pandemics, he continued. Therefore, “robust, long-term solutions”, such as public-private partnerships, are the “best option for pandemic risk solutions”, said Mr Piccolomini. But this requires shared action from “all of us” – the insurance sector, governments and policyholders, he continued. Mr Piccolomini said there are “valuable precedents” from successful government-backed risk facilities around the world for other catastrophic risks such as terrorism, flood, earthquake, windstorm and wildfire. These can help build a pandemic solution but, as Mr Piccolomini pointed out, pandemics aren’t simply a national threat and require a wider solution. “The virus does not stop at borders. In fact, we all underestimated the domino effect it is having on our global economy and society. This risk is simply too big for government or the private sector to manage alone and too important to ignore. Public-private partnerships are the viable solution moving forward, with all parties – policyholders, taxpayers, insurers, reinsurers and government – taking part. The level of involvement of the different parties and exact setup of these public-private partnerships will differ between regions and countries, but one thing is sure: we all have to work together to close this protection gap,” he said. Mr Piccolomini said if those involved in discussions persist and overcome their differences, the marketplace will be reassured that companies have financial protection against future pandemic risk, which will boost the pace of economic recovery. And if done correctly, a solution would also bring improvements in risk management for the benefit of all, he continued. “Financial protection is not all that we will deliver. With the right incentives in place, we will create a powerful set of incentives that drive behavioural change in the marketplace and society more broadly. Insurance has that traditional societal benefit of bolstering risk mitigation,” he said. The two-day ‘Addressing the Protection Gap for Pandemic Risk’ event is taking place on 23-24 March. It will hear how Covid-19 has affected businesses across the world and the resilience lessons they have learned. The event will also look into challenges around insurability and the important steps needed to better model these risks and build capacity to cover them going forward. OECD secretary-general Angel Gurría said in his opening remarks that the world “urgently” need the insurance sector’s support to develop tools and expertise that will help better manage future pandemic risk, while reducing demands on government finances.

Marsh’s Piccolomini says time to act on pandemic solutions

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