The Federation of European Risk Management Associations (FERMA) has welcomed a report by the European Insurance and Occupational Pensions Authority (EIOPA) on a pandemic resilience scheme and has urged European institutions to act on its ideas.
The report, EIOPA’s Issues Paper on Shared Resilience Solutions for Pandemics, proposes options for public-private partnerships to be explored at national and European level. It's based on the views of representatives of commercial insurance buyers through FERMA, (re)insurers and brokers at the European level.
EIOPA’s principal aim is to address the near-total absence of risk transfer for non-damage business interruption losses (NDBI) for systemic risks, as FERMA proposes in its resilience framework for catastrophe risks.
FERMA stated that a public-private insurance-based solution, based on a sound foundation of risk management, is “essential” to support European enterprises against the pandemic.
The association also argued: “Even though there is action in some member states, European-level involvement is necessary to create resilience across the single market. pandemic has no borders.”
It outlined that only an insurance-based public-private partnership can provide appropriate incentives for companies to apply modern risk management and loss prevention tools that can respond to exceptional risks. This will contribute significantly to the overall recovery from the current pandemic and resilience to future catastrophic events.
For such a scheme to work, FERMA emphasised that the EU must be involved. It suggested that it needs to coordinate and insure minimum standards of national schemes across member states.
According to FERMA, the EU should also establish an expert group for the necessary data sharing and risk modelling, as EIOPA suggested in their report.
“Ultimately, a European financial backstop is likely to be necessary,” said FERMA.
At the same time, FERMA noted that they want to see the EU promote risk management at enterprise and national level.
“Only by doing this, will we strengthen our resilience to catastrophic risks,” it added.