Evaluating the Role of Insurance in Managing Risk of Future Pandemics

Abstract

This paper provides stakeholders with a practical framework, informed by the recent experience with COVID-19, for defining a meaningful role for insurance in managing business interruption (BI) and other risks from future pandemics. The insurance industry will be part of that solution set, whether through the continued development of ad hoc state-by-state initiatives, a private-public partnership in which the insurance industry commits its servicing capabilities, or a private-public partnership drawing on both its servicing and risk-bearing capabilities. Policymakers, regulators, businesses, and other stakeholders interacting with representatives from the insurance industry can assist in defining its role in providing protection against the financial consequences of future pandemics. This framework, while designed for dealing with future pandemics, may be applied to other catastrophic and systemic risks.

Keywords: insurance, public-private partnerships, pandemics, catastrophic risk

JEL Classification: D81, D91, G22, H84