Aon and Munich Re have announced the launch of a first-of-its-kind pandemic reinsurance solution for Indonesia and the Philippines.
The pandemic solution is designed to help organisations address non-damage business interruption losses arising from a pandemic – a risk often excluded from many property and casualty insurance policies, except in areas such as medical and travel insurance. Pandemic risk remains a significant exposure for governments, businesses and communities, with the potential to disrupt trade, supply chains, travel, hospitality and public services at a significant scale.
The solution enables Aon to access dedicated, highly-rated pandemic capacity for clients’ hospitality industry risks, with Munich Re providing reinsurance capital, pricing, and wordings. It combines indemnity-based coverage with parametric triggers, which is intended to provide greater clarity and confidence around coverage response (subject to policy terms) while supporting a more efficient approach to risk transfer.
The solution has been developed for clients in Indonesia and the Philippines, where Munich Re and Aon teams identified specific coverage needs and designed a solution to address them.
Aon CEO of Asia Reinsurance Solutions Soeren Soltysiak said that the COVID-19 pandemic highlighted the protection gap for this peril, particularly for non-damage business interruption losses. “It also reinforced the need for new solutions that help organisations build greater financial resilience and confidence ahead of potential future outbreaks. By combining specialist reinsurance capacity with a solution specifically designed for pandemic-related losses, we will help clients achieve greater clarity and confidence in how they can protect their balance sheets against possible future events,” he said.
Munich Re CEO Asia Hitesh Kotak said that pandemic risk remains one of the most significant protection gaps facing economies across Asia. “This solution provides organisations in Indonesia and the Philippines with greater access to protection against pandemic-related disruption and supports their ability to recover and grow following future public health events,” he said.
Munich Re Global Head of Epidemic Risk Solutions Dr Gunther Kraut said that epidemic and pandemic risk requires robust approaches to risk sharing and capital deployment. “Similar to other perils, affirmative specialist insurance solutions are required to help address the challenge of global risk accumulation. Munich Re is committed to supporting solutions that help clients manage the financial consequences of these events,” he said.
The pandemic solution reflects Aon’s ability to bring together its global capabilities across Risk Capital to structure solutions for evolving client needs, and support greater resilience against emerging and interconnected risks.