Loss of Income due to Pandemics

What does the commercial insurance market cover?

The extent of the Coronavirus pandemic and its global impact on business, industries and economies could not be predicted. A worldwide survey amongst 2,700 risk experts concerning the biggest risks for companies ranked pandemic on 17th place. (source: Allianz Risk Barometer 2020).

Given the lack of demand, the insurance sector did not have to provide suitable and economically viable products – the exception being the more sensitive sectors such as hotels/tourism and the food industry in the event of diseases. Occasionally, insurers offer an infectious disease cover as an extension to existing property policies. This type of insurance, however, provides only limited coverage – both financially and in time, in the event of company closures in accordance with the law governing epidemics.

Business Interruption Insurances are not an Option
Normal property and business interruption insurances (BI) do not provide any coverage in the event of a loss of income due to disease because the BI insurance is based on the prerequisite for a property damage being the cause of the business interruption.

Possible future solutions for larger industrial companies include a parametric coverage or so-called non-physical damage BI insurance. In this sense, we have started talks to insurers and reinsurers a few weeks ago. From some of them we received first positive replies, showing an interest to collaborate with us.

However, the crisis has gotten worse over the past few weeks. Currently, the entire insurance market (nationally and internationally) is keeping an eye on developments and is not offering any new solutions.

We must wait until things in the insurance markets have calmed down again after the COVID-19 pandemic and see whether suitable solutions will then be offered.