Lloyd’s is urging industry and government collaboration in countries including Australia to improve risk protection responses to the COVID-19 pandemic and future risks.

The London-based marketplace last week released a white paper developed after widespread consultations that outlines three suggested models, labelled ReStart, Recover Re and Black Swan Re, to deal with immediate and long-term challenges.

“In the case of Australia, through this report we reached out to all of the mainstream general insurance industry directly,” Lloyd’s Australia GM Chris Mackinnon told insuranceNEWS.com.au. “We have shared this report with them and said we would like their input and their feedback and we’d like to work with them. We have also shared it with government at all levels.”

The ReStart proposal, which focuses on non-damage business interruption cover for SMEs seeking protection against a second COVID wave, is already being developed by Lloyd’s with an initial focus on the UK.

Recover Re, involving “after-the-event” cover, and Black Swan Re are proposed as initiatives that would be backed by Government guarantees.

Mr Mackinnon says global pandemics are beyond the resources of the insurance industry alone, while Governments also are under pressure from high level of expenditure on assistance packages.

The report says the global insurance and reinsurance asset pool is estimated at $US2 trillion ($2.87 trillion), while government fiscal support packages in response to the pandemic totalled $US9 trillion ($12.9 trillion) as of May. They could reach $US15 trillion ($21.5 trillion) by the end of the year, according to the International Monetary Fund.

“It is really important that we engage with governments and sovereign funds, to work in partnership to create some solutions going forwards,” Mr Mackinnon said.

Recover Re is a proposed government and industry open framework to provide immediate relief and cover for non-damage business interruption cover, including for the current pandemic.

The “after-the-event” insurance would allow a retrospective immediate cash injection for a targeted portion of SMEs hit by losses, with payments recouped by insurers over the long-term, supported by a government credit-risk guarantee.

The Black Swan Re framework could provide reinsurance for commercial non-damage business interruption cover for future systemic risks through pools backed by a government guarantee to funds where the pool is insufficient.

Mr Mackinnon says the proposals build on approaches already used in insurance markets, such as terrorism pools, and the work is underpinned by reforms underway to make Lloyd’s more flexible and innovative.

“The paper is effectively designed as a call to arms, to get the whole industry and governments around the world collaborating and thinking into the future,” he said.