Does a contract cover the risk of an epidemic?
If we consider COVID-19 in terms of its consequences on people's health, then no contract strictly speaking covers the risk of an epidemic, but it is health insurance that is at the heart of compensation and medical care.
Health insurance even intervenes to pay daily allowances to people who are confined to their homes and cannot work from home.
As a result, the insurance market will be impacted in its mutual and provident branch:
- Mutual insurance, for the usual care coverage;
- provident if employers have to compensate for the variations between the daily allowances paid by the health insurance and the salaries usually paid.
However, COVID-19 is also becoming increasinglytalked about because of the economic consequences it causes: according to the World Bank, a pandemic on the scale of the 1918 Influenza epidemic could reduce world GDP by 5%. de 5%.
Many traders are already feeling the negative effect of this
epidemic and the restrictions and fears that accompany it. And, it must be admitted, very few traders are insured against the risk of Business Interruption due to an epidemic, since most often only Business Interruption due to a guaranteed damage is covered: for example, Business Interruption
due to fire or water damage - which is itself supported - is covered.
On the other hand, cancellation insurance taken out by event organisers should be able to function, as long as the cancellation of events is decreed by the government.
What could be the insurance solution?
The insurance solution does exist, it would be necessary to have taken out a Business Interruption policy without damage. To be clear and concise, we are on the same principle as Cyber or Terrorism Risk insurance. It is hard not to think of the long, even tedious beginnings of cyber risk insurance: high premiums, high deductibles, difficulties in defining the scope of coverage, many new entrants to the market for this insurance... And, this is what also appears in the case of insurance against health risks.
Indeed, according to a survey of risk managers conducted by AMRAE last December, 55% of the companies surveyed considered taking out a specific policy without damage... before giving up because of an almost non-existent offer, with both high premiums and deductibles and a very complex and tedious underwriting process.
Following COVID-19his market will undoubtedly develop, but, if we are to believe Christophe Eberlé, Managing Director at Optimind: "On health risk, as well as cyber risque, insurers are faced with a difficulty in assessing the scope of the risk and the insurable mass. But, over the next ten years, these two risks may create more turnover for insurers but also more uncertainty".
Can I take out this type of contract?
If, unlike other companies, you are not discouraged by the underwriting procedure and the high rates, then yes, you can take out this type of insurance, since some insurers distribute it.
But keep in mind that, for COVID-19, it is already too late! Indeed, the purpose of insurance is to insure a hazard, not a certain risk! You can only anticipate the next epidemic, while being well aware that insurance models give this risk very little probability, between 0.5 and 1% annually.