Investigating Risk Pooling to Insure Against Pandemics

Is a Pandemic Risk Pool the solution?

Covid-19 has no doubt left a devastating impact on the world, with more than 1.6million deaths and more than 72million cases. Equally this pandemic is severely impacting the global economy. The Asian Development Bank estimates losses of up to US$8.8trillion – or almost 10% of global gross domestic product – as a direct result of Coronavirus. As many as 242million people worldwide could lose their jobs with overall income reduced by $1.2trillion.

While a terrorist attack might cripple part of a city or a cyberterrorism attack impact a few countries, neither are likely to affect the entire globe as we have seen with Covid-19. That puts the sheer size required for a pandemic pool into perspective.

Paula Jarzabkowski, Professor of Strategic Management at the City, University of London Business School and the University of Queensland Business School, has published extensively on the topic of public-private partnerships in the event of catastrophe.

“Policyholders or businesses could be levied for a business interruption product and the premiums all passed into the pool, which would then build up a pot of capitol with a backdrop from the government”.

She adds that we need to remember that not all pandemics will present like this one and we should ‘begin to understand what degree to type of pandemic the private market could take’. A risk pool is a very good way to go about establishing an insurance product that can gradually be shared with the private market’.

You can read more about risk pooling here

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