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The public sector should evaluate the industry’s potential, non-risk bearing contributions to pandemic preparedness and abilities of resilience-building through risk assessment and mitigation and claims management, according to the Geneva Association. (Credit: eamesBot/Shutterstock.com) The public sector should evaluate the industry’s potential, non-risk bearing contributions to pandemic preparedness and abilities of resilience-building through risk assessment and mitigation and claims management, according to the Geneva Association. (Credit: eamesBot/Shutterstock.com)

Despite pushing boundaries to develop innovative solutions for new and evolving risks, some events are beyond the insurance industry’s ability to cover, such as business interruptions caused by pandemics, according to The Geneva Association.

“Pandemic business continuity risk was, in general, never possible nor intended to be covered by the private sector,” Kai-Uwe Schanz, Geneva’s deputy managing director and head of research and foresight, wrote in a research brief. “To some extent, this reflects demand-side reasons such as an endemic underestimation of the frequency and severity of pandemics. However, the shortage of supply primarily results from the high level of embedded risk and, therefore, prohibitively high amounts of capital needed to underpin credible insurance commitments, attributable to the unique correlation in the frequency and severity of pandemic business interruption losses.”

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Steve Hallo

Steve Hallo is an assistant editor with PC360 Group. Prior to his current position, Steve spent nearly a decade covering retail transformation, consumer trends, manufacturing issues and supply chain challenges impacting global CPG markets. He can be reached at [email protected], and on LinkedIn and Twitter.  

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