ICA explores insurance solutions for future pandemics

The Insurance Council of Australia (ICA) has told a parliamentary committee it has engaged actuarial consultancy Finity on the insurability of future pandemics. A pandemic risk insurance pool is one of the options currently being explored.

ICA chief executive Rob Whelan said that pandemics were generally excluded from insurance contracts due to the “sheer size” of the exposure.

He said the ICA has asked Finity to consider a range of options over the next couple of months, with the hope of proving “some level of insurance cover for these sorts of extraordinary events”.

The work will consider “what options may exist or can be developed to put the insurance industry in a position where they can cover some or most of these types of losses if a similar sort of event were to occur in the future”.

The comments surrounding pandemic insurability were made during the House of Representatives Economic Committee Inquiry into Australia’s General Insurance industry. Committee chair, Tim Wilson MP, said the purpose was to “hold Australia’s insurance sector to account”.

”Given the widespread misconduct in the insurance sector identified by the Hayne Royal Commission, it is important that insurers and those in the industry are held accountable to ensure that they are making the crucial improvements needed to restore trust in the sector,” he said.

“The COVID-19 pandemic has also raised a number of relevant issues relating to policy coverage… that also need to be explored.”

In his opening remarks to the committee, Whelan noted that the insurance industry was ”rising to the challenges of natural disasters and the initial impact of COVID-19. They are helping customers affected by the pandemic through a wide range of assistance packages, including discounts, rebates and refunds.”