Mobilising insurance expertise to combat Covid-19 economic consequences
Professor Paula Jarzabkowski has been awarded a prestigious Covid-19 grant from the Economic and Social Research Council (ESRC), which is part of UK Research and Innovation (UKRI), for a new project entitled ‘Risk sharing mechanisms to mitigate the economic consequences of pandemics: mobilising insurance expertise & capital to provide solutions for the UK’. The industry partners will include the Association of British Insurers; the Government Actuary’s Department; Flood Re; Pool Re, and the Confederation of Business and Industry.
Professor Jarzabkowski and her team will work with these partners to develop a business interruption (BI) risk-sharing mechanism, evaluate and build upon current post-lockdown products being generated by insurers, and develop new solutions. The project will make recommendations for a sustainable longer-term governance and funding solution for supporting UK business against interruption from current and future pandemic.
More details about the project, which will release interim outcomes and make its final recommendations in August 2021, are available here.
Professor Paula Jarzabkowski said she was delighted to receive the funding, commenting:
“The pandemic is too systemic to be covered by the insurance industry, and yet we will need insurance to enable business to keep trading, and to help kickstart our economy following the lockdown. We therefore need to look at how to evolve business interruption products and ways to share business interruption risk between businesses, the insurance industry and the government.
This is vital to give business the confidence to trade and allow the economy to recover, particularly while we deal with the uncertainty of future pandemics alongside all the other types of losses from which we will need insurance protection.
While the government is currently acting as the ‘insurer of last resort’ and simply putting taxpayers' money into keeping businesses afloat, a properly planned ex-ante insurance mechanism would allow at least some of this loss to be paid by the insurance industry and also enable governments to identify additional support for future pandemics.”