The Federation of European Risk Management Associations (FERMA) has created a taskforce to create proposals to address the issue of business interruption coverage for catastrophic risks.
The aim of the taskforce is to support the creation of economies that are resilient in the face of systemic and catastrophe risks, explained Dirk Wegener, president of FERMA.
The task force, made up of senior risk managers from FERMA members, plans to publish its initial results by the end of May.
FERMA and the member associations want to open a dialogue with all relevant stakeholders, including EU institutions, insurers and brokers, and government bodies.
Additionally, it was noted that FERMA has called for a discussion among these stakeholders to create a holistic solution that provides cover for non-damage business interruption for all types of catastrophe risks, not just pandemic.
“We intend to draw on that expertise to make concrete proposals to form the basis of discussions with stakeholders,” Wegener said.
Meanwhile, FERMA also argued that the impact of catastrophe events, like the current pandemic, are beyond the resources of the private insurance industry and enterprise risk management alone.
The absence of business interruption cover without a requirement for physical damage, or non-damage business interruption, is a critical issue, FERMA explained. It affects all sizes of business, but especially small and medium enterprises.
FERMA identified that several European countries have existing public-private partnerships to cover extraordinary risks.
The landscape is diverse and, inevitably, each has strengths and weaknesses. The taskforce suggested it will be essential to avoid easy solutions.
Wegener added: “Any catastrophe mechanism for business interruption must be able to respond to various types of disaster, address the complexities of catastrophes and avoid the pitfalls of existing schemes.”
