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Zurich Pandemic Insurance Plan Modeled On Crop Program
The concept calls for reinsurance pools that would allow companies to choose how much risk they would keep, an element that differentiates the proposal from others.
- Timothy Darragh
- January 2021
Zurich Insurance Group has waded into the pool of industry-related groups developing plans for covering the next pandemic and has introduced a concept that follows the model of the federal crop insurance program.
The company said its plan, like others, starts with the premise that pandemics are uninsurable events without a significant role played by the federal government.
The proposal calls for reinsurance pools that would allow companies to choose how much risk they would keep, an element that differentiates Zurich's plan from others, Brandon Fick, chief underwriting officer at Zurich North America, said during a National Association of Insurance Commissioners virtual Fall National Meeting panel discussion.
The program that we have today is not the crop program that we had almost a century ago. It’s evolved over time as companies got comfortable with the risk.
Zurich North America
Insurers could cede 100% of the risk back to the federal government, while others could keep a portion of the risk as they got comfortable with the program. The plan would be a dynamic one, changing with the demands of the marketplace, he said.
In that respect, the Zurich proposal models the federal crop insurance program, he said.
“The program that we have today is not the crop program that we had almost a century ago,” he said. “It's evolved over time as companies got comfortable with the risk.”
The risk pools also would meet Zurich's goal of recognizing that small businesses should not be treated the same as large ones.
“We don't want the larger companies to be sucking the capacity out of this program,” Fick said.
Peter Caminiti, vice president and property technical director for Zurich North America, said the program would be mandatory for commercial property insurers so that coverage is widely available.
Rates also have to be heavily subsidized by the federal government so that takeup is high, Caminiti said. Otherwise, the government is stuck with the type of disaster relief programs that have been enacted since the COVID-19 pandemic struck, he said.
Choices of deductibles also would provide flexibility for policyholders, Fick said, adding plans should incentivize policyholders to mitigate their risk before the next pandemic strikes.