Pilot launched for disease and epidemic insurance

African Risk Capacity (ARC) has begun a pilot to roll out parametric insurance cover against disease outbreaks and epidemics. San Francisco-based Metabiota has launched its risk modelling work for an ARC outbreak and epidemic insurance product, first announced by ARC last October. ARC has been looking to expand its remit beyond its drought product in order to diversify and therefore improve the efficiency of its sovereign risk pool. The aim is to help African nations better plan for and mitigate the risk of infectious disease outbreaks within their countries, providing an insurance product that will pay out rapidly should an outbreak show signs of developing, helped by the use of parametric triggers and backed by global reinsurance capacity. The World Bank estimates the cost of managing the Ebola outbreak could have topped $32bn, with an estimated $2.2bn lost in GDP in the three hardest-hit African countries. Last June, the World Bank ttp://www.commercialriskonline.com/bond-launched-pandemic-solution launched a bond designed to finance efforts to stop pandemics. It is the first time World Bank bonds are being used to combat infectious diseases. They will support the Pandemic Emergency Financing Facility, designed to channel first-response surge funding to developing countries facing the risk of a pandemic. Meanwhile, the pilot between ARC and Metabiota aims to deliver the risk modelling necessary to assess each nation’s risk, as well as the insurance triggers that can provide the best protection while being most responsive and offering advanced insight into developing epidemics. Metabiota said the firm’s research demonstrates that outbreaks show distinct patterns and so can be insured with the use of parametric trigger design, while other risk profiling and contingency planning support can be set up in advance to offset the impact. The ARC Outbreak and Epidemic programme will evaluate public health risks through a “multidimensional self-assessment of the country’s ability to respond to an epidemic event, as well as putting in motion contingency plans for such an eventuality”. Mohamed Beavogui, ARC director general, said: “Like everything ARC does, this collaboration is aimed at increasing the resilience of African states by giving them the capacity and tools to plan, prepare and finance an early response to public health outbreaks before vulnerable lives are lost and livelihoods are ruined. “Metabiota understands risk and how it can be measured, so we believe this programme marks the next frontier for how Africa, and the world, can better manage outbreaks.” Dr Karen Saylors, vice-president of field research for Metabiota, added: “This ARC pilot empowers African nations to develop a novel, proactive approach that will change the way outbreaks are managed and that is one of the many reasons we are excited about this programme.” Metabiota’s technology and insights will help insurers and also the reinsurance community to understand the risks ARC will then seek to transfer as part of its risk pool. The addition of epidemic risk to the risk pool will add diversification and may actually result in added reinsurance efficiencies, as some global players may find the more diverse risk pool a more attractive underwriting proposition.

Pilot launched for disease and epidemic insurance

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