Reinsurers’ policies not to cover pandemics

MUMBAI: Most Indian organisers, like the Indian Premier League (IPL), missed out on a pandemic cover for events because the markets started shutting down soon after the outbreak in China.

While no one can now buy a pandemic cover since the event has already occurred, international insurers are beginning to exclude coronavirus even from liability covers like Directors & Officers (D&O) policies, which protect managements from being sued. In India, the focus of event cancellation has been largely around weather and terrorist attacks. Given that the country was not impacted by the Swine Flu pandemic or any other outbreaks, no one really sought such a cover.

According to insurance broker Howden India’s MD Amit Agarwal, large event insurance covers are customised and — either specifically or silently — exclude a pandemic. A silent exclusion is one where the intent of the policy is to cover certain known risks like weather. “Once the event has occurred, no one will be able to buy pandemic cover. What we are now seeing is that reinsurers are specifically excluding pandemic risks from liability covers like D&O policies,” he said. What this means is that if any of the stakeholders sue the management of a company for any reason that is triggered by the virus, the policy will not cover the defence.

“As of now, there are no covers for businesses that cover pandemic outbreaks,” said Subrata Mondal, executive vice-president (underwriting) at IFFCO Tokio General Insurance. “By and large, a lot of reinsurers are excluding pandemic outbreaks across all lines, including liability lines,” he added. According to Mondal, since liability insurance covers are driven by reinsurance, most of these policies are issued more or less on the reinsurer’s terms. Also, unlike motor insurance covers that are a standard document, these policies are more like a bi-partite agreement.

While there are no covers for business risks, companies can still look forward to providing protection to their employees. “Employers can look at providing some kind of a Covid cover similar to what the government has done for healthcare workers across the country,” said Agarwal. Several companies are directly selling Covid-19 protection covers to individuals. Reliance General Insurance is offering a group insurance cover that offers the sum insured in the event the policyholder is tested positive for Covid-19. This cover has been purchased by Paytm and Yes Bank for customers who choose to be part of the scheme for a premium.

E-tailer Flipkart has partnered two insurers ICICI Lombard and Digit Insurance. Digit Illness Group Insurance offered by Digit Insurance allows consumers to avail a hospitalisation cover up to a sum assured of Rs 1 lakh with an annual premium of Rs 511. Covid-19 Protection Cover by ICICI Lombard provides an instant Rs 25,000 benefit plan paid to the customer on positive diagnosis of Covid-19. It is affordably priced at an annual premium of Rs 159.

There have been reports of how the All England Lawn Tennis & Croquet Club will recover 114 million pounds of its losses caused by the cancellation of Wimbledon 2020 as it has been continuously purchasing a pandemic cover after the SARS outbreak in 2003. The exposure of organisers, team owners and broadcasters to the IPL is much higher.

Source: The Times of India