Tuesday, August 4, 2020

Are there already pandemic insurance guarantees?

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Could one day foresee facing such economic consequences? The Covid-19 epidemic brought France to a halt and led to colossal operating losses in the wake of around 60 billion euros, according to the French Insurance Federation. A sum that insurers do not want to pay, arguing that such an amount would put the sector “on the ground” The pandemic risk “is inherently uninsurable», Also hammer loop representatives of the sector against the slingshot of employers’ organizations. In addition, like many countries around the world, losses that are not the result of direct material damage to property are not covered.

Although the arguments put forward by insurers are legitimate and perfectly legal, contracts that contain “pandemic guarantees”, nevertheless, do exist. These insurance products cover the type of pandemic we are going through – although its character and the inherent damage are exceptional – as explained by Axa CEO Thomas Buberl in an interview with JDD. The leader maintains “that a company can also be insured against the risk of business interruption linked to an epidemic, even if it is quite rare for a company to take out this type of insurance. ”

“We have unearthed contracts which take into account the loss of activity in the event of a pandemic but which are not offered”, denounced in early April in the columns of Figaro chef Stéphane Jego. “There is a real lack of visibility on these covers and a lack of communication“, Insists the restaurateur, who”would have subscribedTo this type of contract if he had known.

It’s not a lack of communication“Defends Mr. Gros, lawyer specializing in insurance at Hogan Lovells. “Yes, such specific contracts exist but they are very rare, these are special cases. If they are not offered very much, it is because the need was not perceived until then, it was not a requested product ”. A distinction must be made between two types of contracts, “pandemic insurance” contracts, tailor-made contracts very rarely taken out (by large industrial groups for example), and contracts more frequently taken out: insurance contracts which cover losses. resulting from damage to property and a “serious health risk

These do not aim to cover in general the risk that we are currently facing, coverage for a health risk does not necessarily extend to a pandemic in the broad sense“Continues Mr. Gros. For the lawyer, it is from this guarantee that confusion could arise, the insured believing that they are covered against the pandemic risk when they are not in reality. “Restaurant owners, for example, have been able to sign contracts that cover operating losses when a closure is ordered individually by the authorities because of a “health risk”, but this most often concerns the case of a business which poses a risk to its employees and customers” Example: the presence of salmonella (bacteria which causes serious food poisoning, Editor’s note).

Clearly, when the “health riskThreatens to spread from the inside of a business to the outside. “Insured persons may have believed that they were covered for the risk of a general pandemic. However, the amount of premiums collected is in the order of one hundred million euros for these operating loss guarantee contracts and would not cover the systemic risk

The boss of l’Ami Jean, in Paris, Stéphane Jégo, revolted by the economic crisis which affects all restaurants and “looks fatal“, Has posted a petition signed to date by more than 133,000 people, and written for the Minister of Economy. He campaigns for “push the government to declare a state of natural health disasterAnd thus pave the way for compensation for operating losses. The state of health catastrophe being obligatory in each insurance contract of a good and calibrated between 6% and 12% of the amount of the total premium by way of decree.

Private public partnership

Legislators took up the problem a week after the containment by including, in his emergency bill, an essential track to cushion the economic shock in the event of the next pandemic. Thus, parliamentarians proposed on March 24 to “build an insurance scheme for risks linked to serious health threats, along the lines of natural disaster risk insurance, to ensure the economic world of tomorrow. It would be financed by an additional contribution, on the model of what is provided for the insurance of risks of natural disasters

Work has already started in Bercy, in collaboration with the insurers. “In six months, we must be able to develop this type of loss to complete the insurance contracts, it is important“Confirmed Bruno Le Maire last Friday during the examination of the amending finance bill. “It is a copy and paste of the law relating to compensation for victims of natural disastersSays a specialist familiar with the matter.

This proposal is described as a private and public partnership, with insurers who would compensate a first tranche and the State which would take overExplains Me Gros. “Merely“ pandemic insurance ”would not be enough. Assuming that the amount of premiums collected is similar to that of natural disasters, the financial reserves built up by insurers over 10 years would amount to around 15 billion euros, or a quarter of current needs estimated at around 60 billion. “. If we take the time elapsed since the last health crisis of this magnitude, the Spanish flu in 1918, contributing for 102 years would, on the other hand, allow us to build up reserves of the order of “153 billion euros

.

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