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Law360, London (April 21, 2020, 12:56 PM BST ) Insurance industry heavyweights led by terrorism reinsurer Pool Re are working together to find a common response to the surge in virus-related claims, including potential plans for a pandemic reinsurer.
The chief executives of Aviva, RSA and Willis Re are among those who have formed a steering committee, which will coordinate the industry's response to the crisis and examine long-term solutions. The group will work with Pool Re, a government-backed reinsurer, which will provide "structural recommendations."
A reinsurer effectively insures a portion of the risk on any policy, limiting the amount an individual insurer has to pay out in a single claim.
"The insurance industry needs to be on the front foot in the current situation, paying claims quickly and continuing to provide people and businesses with the protection they require," said Stephen Catlin, a member of the steering group and chief executive of Convex, a re-insurer.
"Most importantly we need to find an industry solution for future pandemics and this group has many years of combined industry experience."
Insurers have come under fire for refusing to compensate businesses for losses run up during the lockdown. But industry groups say the current pandemic is "too systemic" to allow private companies to offer protection against the crisis and have called for a government-led approach.
The steering group, which met for the first time on Friday, also includes Maurice Tulloch, chief executive of Aviva; Stephen Hester, chief executive of RSA; Julian Enoizi, chief executive of Pool Re; Nick Frankland, U.K. chief executive of reinsurance at Aon; James Nash, international chief executive of Guy Carpenter; and James Kent, chief executive of Willis Re.
Pool Re, founded after the Irish Republican Army attacks on London in 1992, relies on all members to contribute for major property losses caused by terrorism.
If that reserve is not enough to pay out on claims, the reinsurer also has a £6.6 billion fund built up over the years through members' contributions. The reinsurer can draw on government support If that becomes exhausted.
The idea of a Pandemic Re, on the model of Pool Re, has been floated by industry commentators since the start of the coronavirus crisis. John Neal, chief executive of Lloyd's, said last month that the corporation was advising the Treasury on potential industry-led responses.
The Association of British Insurers has also called for the government to subsidize pandemic insurance cover for domestic businesses, a model closer to another state-backed reinsurance scheme, Flood Re, which effectively guarantees affordable home insurance for homeowners living in areas prone to flooding.
--Editing by Ed Harris.
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