Arpita Agnihotri, Saurabh Bhattacharya
Ivey Publishing (W21048-PDF-ENG)
February 17, 2021
In 2018, Marsh USA Inc. (Marsh), a New York-based insurance company, launched an innovative pandemic insurance product called PathogenRX. However, there was no demand for the product until the COVID19 pandemic outbreak in 2020. During the pandemic, some US companies attempted to claim business interruption claims from their insurers, but were rejected because their policies did not cover pandemic claims. Unlike other catastrophic events, pandemics do not appear to be insurable. In May 2020, industry experts estimated that American small businesses could lose up to $ 431 billion due to the COVID19 pandemic. Marsh’s CEO wrote a letter to Congress and the President of the United States requesting that a government-sponsored pandemic insurance plan be developed to cover extremely high potential claims. The federal government could act as a reinsurer and prevent the American insurance industry from collapsing due to increased claims from American companies. However, some questions remained: What challenges may arise in the sale of insurance against a pandemic and how could they be solved? Was it preferable to work with a government or a private reinsurance partner? How could the pandemic insurance model be improved to better predict potential premiums and losses?
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