Future pandemic insurance has come to Australia amid WHO warning
Lockton, a privately owned insurance broker, has secured the support of Munich Re, a reinsurance, primary insurance and insurance-related risk solutions provider, to offer an Australia-first parametric insurance solution for future pandemics.
The insurance comes as the World Health Organisation (WHO) recently warned that the world must prepare for the next pandemic. Independent risk modeler Metabiota has predicted the probability of another pandemic of the same or greater magnitude as COVID.
Better risk management solutions were needed for the travel industry
Government support is not always immediate or guaranteed. In future pandemics, it is likely there will not be the ability for the Government to provide support at anywhere near the same level as COVID.
During large-scale infectious disease outbreaks, the travel and tourism industry are highly exposed to economic damage. And when the world returns to “normal”, there are still considerable extra, ‘hidden’ costs to fund.
“With no pandemic insurance protection available during COVID-19, the travel and tourism industry was at the mercy of Government handouts, many which had to be fought for at every turn by the industry’s premier associations,” said Lockton’s travel leader Rebecca Fleming.
Travel organisations need quick access to funding
Quick access to funding not only helps organisations maintain market share, but also enables the industry to retain critical staff. Further, it boosts customer confidence and empowers organisations to develop new methods of delivering on their obligations.
The insurance is triggered when the WHO reports a future outbreak has occurred. The insurance payout can be used to fund any of the following scenarios:
- Financial loss cover: income from sales – tickets, cruising, tours & accommodation.
- Managing the workload: access to funds to pay staff.
- Employee retention: retaining critical staff is vital for a swift return to normal.
- Debt interest repayments: monthly interest repayments due to banks or other creditors.
- Rent cover: landlords may not accommodate continued rent reductions.
- Extra expenses and unique loss scenarios cover: one size does not fit all.
- Small limit – big impact: access to insurance that will pay-out quickly not only assists in surviving a catastrophic disease outbreak event, but allows businesses to rapidly adjust operations to minimise additional financial loss and reputational damage.
“Although, suitable for all industries, I’m so proud that we were able to deliver this for the travel Industry. My passion for providing protection and innovative solutions for travel made this an easy project to throw myself into,” 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 for many. It was a difficult time and unfortunately, resulted in loss of revenue and cancellations throughout the industry.
“This product can be tailored to deliver funds when companies need it the most. Whether it be to retain staff, to get refunds back to passengers, provide rent relief on bricks and mortar stores, to keep customers engaged until travel is possible again, the Parametric Pandemic Product will be able to make these important business decisions a reality.”
Email the Travel Weekly team at traveldesk@travelweekly.com.au
Rebecca Fleming WHO world health organisationLatest News
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