INSURANCE
Irdai sets up working group to examine possibility of setting up ‘Pandemic Risk Pool’
Jul-09-2020

In order to deal the risks associated with disruption in economic activity following an outbreak of coronavirus-like health emergencies, the Insurance Regulatory and Development Authority of India (Irdai) has set up a working group to examine the possibility of setting up a ‘Pandemic Risk Pool’. It said there is a need to examine long-term solutions to address the various risks which have been triggered by the current pandemic and offer protection in case of a future similar crisis.

The nine-member working group to be headed by Irdai Executive Director Suresh Mathur will explore the possibility of addressing these risks and any other related risks arising out of a pandemic through the mechanism of Pandemic Risk Pool. The COVID-19 pandemic, which started as a public health emergency, has led to significant disruption in economic activity mainly due to the measures taken by the government to limit the spread of the disease.

The regulator said the pandemic has affected not only health but all sectors of the economy including manufacturing, aviation, tourism, transportation, construction, services, and agriculture. It said some of the risks like business interruption losses without concurrent material damage loss; loss of employment would result in huge losses much beyond the capacity of government/ insurers/ reinsurers. It has taken several steps, including asking insurers to come out with specific policies for COVID-19, to provide relief to policyholders.

As per the terms of reference given to the working group, it will study the need for setting up ‘Pandemic Risk Pool’ giving rationale for the same, recommend the structure and operating model for the pool and examine any other matter relevant to the matter. It added that the working group shall submit its report within eight weeks.

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