The Geneva Association, an international group with members in 25 countries, says “unambiguous” research findings show property and casualty insurance is not the right vehicle for shouldering losses from the COVID-19 pandemic.

MD Jad Ariss says that while pandemics on the scale of COVID-19 pose no fundamental insurability challenges for health and life insurers, the picture is different for property and casualty.

“Even those who anticipated the scenario of a global pandemic did not fathom the nature and scale of government decisions taken around the world to slow infections,” he says in an introduction to a research report.

“From an insurance perspective, this type of government response is neither predictable nor modellable. That is one of the reasons why pandemic risk was not included in most business interruption policies.”

Insurers would have to collect business interruption (BI) premiums for 150 years in order to absorb the estimated global output loss inflicted by COVID-19 and its handling this year, according to the research.

The property and casualty sector collects $US1.6 trillion ($2.2 trillion) in premium per year for all policies, and a “mere” $US30 billion ($42 billion) for business interruption, while the projected global loss in gross domestic product this year is $US4.5 trillion ($6.3 trillion).

“Effective private market insurance coverage for BI losses would necessitate rates which would likely be unaffordable or unattractive for commercial buyers,” it says.

The Geneva Association, which represents insurance and reinsurance members, says the report released last week, titled An Investigation into the Insurability of Pandemic Risk, will be followed up later this year by a study on public and private sector solutions.