FERMA launches cat risk business interruption taskforce
The Federation of European Risk Management Associations (FERMA) has launched a taskforce to make proposals to address the issue of business interruption coverage for catastrophic risks.
FERMA believes the impact of catastrophe events like the current pandemic are beyond the resources of the private insurance industry and enterprise risk management alone. The absence of business interruption cover without a requirement for physical damage – or non-damage BI – is a critical issue, affecting all sizes of business, but especially SMEs, it said.
The task force will comprise senior risk managers from FERMA members, and is expected to publish its initial results by the end of May. FERMA and the member associations want to open a dialogue with all relevant stakeholders, including EU institutions, insurers and brokers, and government bodies. It hopes this will lead to a holistic solution that provides cover for non-damage business interruption for all types of catastrophe risks, not just pandemic.
Dirk Wegener, president of FERMA, said the aim was to support the creation of economies that are resilient in the face of systemic and catastrophe risks.
“FERMA’s member associations are composed of people with great knowledge of business risk management and business insurance,” he said. “We intend to draw on that expertise to make concrete proposals to form the basis of discussions with stakeholders.”
Several European countries have existing public-private partnership to cover extraordinary risks. The landscape is diverse and, inevitably, each has strengths and weaknesses. The taskforce believes it will be essential to avoid easy solutions.
“Any catastrophe mechanism for business interruption must be able to respond to various types of disaster, address the complexities of catastrophes and avoid the pitfalls of existing schemes,” said Wegener.
