Lockton has introduced parametric insurance for travel firms that is triggered when the World Health Organisation declares a pandemic. 

Underwritten by Munich Re, the product covers losses incurred from any future virus or disease outbreaks and offers express claims settlement and payout. When the pre-defined parameters are met, the policy is triggered and payment is swiftly made following a declaration of economic damage.  

Payouts can fund financial loss from ticket sales, refunds, staff salaries, interest repayments and other business operational costs such as rent. Other business impacts may include extra expenses from health and safety considerations or IT and fixed costs. 

Lockton Manager Tourism and Travel Rebecca Fleming tells insuranceNEWS.com.au she has a passion for providing protection and innovative solutions for travel. 

The parametric product delivers funds when companies need it the most, whether to retain staff, get refunds back to passengers, provide rent relief on stores, or keep customers engaged until travel is possible again. 

“The Parametric Pandemic Product will be able to make these important business decisions a reality,” Ms Fleming said.  

“The travel industry was one of many that were severely impacted by COVID-19. The heartache and endless efforts into credits being organised and countless refunds for the public is a forgotten and untold story. It was a difficult time and unfortunately, resulted in loss of revenue and cancellations throughout the industry.” 

The trigger for the economic impact payout is the WHO reporting an outbreak has occurred in the policy period and declaring a Public Health Emergency and the country of the insured asset enacting a Civil Authority Restriction in response to the outbreak. 

When the parameters are met or exceeded, payment is made swiftly following a declaration of economic damage, for example submitting a signed statement without further loss adjustment. 

Munich Re Head of Origination & Underwriting Asia Pacific, Epidemic/Pandemic Risk Solutions Alexander Liu says the pandemic product may be tailored to suit each client’s individual needs.  

"The pay-out can act as a financing bridge to gain quick access to liquidity in order to, for example, fund crisis management responses, adapt the business to survive the event, pay outstanding interest on debt, or simply providing the cashflow necessary until government funding is available,” Mr Liu tells insuranceNEWS.com.au.