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European Commission Official Cautions on Pandemic Public-Private Insurance Partnerships

The coverage mechanisms will require large financing from member states due to the unprecedented physical costs of the measures put in place to manage the COVID crisis so far.
  • David Pilla
  • July 2021
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The COVID-19 pandemic exposed the vulnerability of European society to large-scale disruption, but a European Commission official cautioned any public-private partnership being considered to address those risks needs in-depth study before being implemented.

Some insurance industry stakeholders argue in favor of a common European Union solution to such events based on public-private partnerships that may draw on the experience of national schemes that cover other risks such as terrorism and natural catastrophes, said John Berrigan, EC deputy director general for financial stability, financial services and capital markets union, in a presentation at insurance trade group Insurance Europe's Resilience Week webinar event.

“This is interesting but I want to urge some caution when we're looking at the feasibility of any type of action at the EU level,” said Berrigan. “The costs and benefits of insurance coverage mechanisms, which will require large financing from member states and possibly even a direct role from the EU, should be evaluated very carefully, especially in light of the unprecedented physical costs of the measures put in place to manage the COVID crisis so far.”

Calling the issue “a very complex debate,” he said it needs time to mature not only in light of the COVID-19 impact but also as an evaluation of the capacity of the insurance sector to participate in such partnerships.

A consideration also is the ability and willingness of businesses, particularly small businesses, to participate with new insurance products in the post-COVID world, said Berrigan. He said the costs and benefits of such products must be carefully examined.

“All of these issues will need to be debated in much more detail and will involve issues that go beyond financial services and well beyond the role of insurers,” he said.

Berrigan said a big issue arising from the COVID-19 experience has been “the existence of ambiguity within the insurance contract,” which he said has caused frustration among policyholders and reputation risk for insurers.

“There is a need for clearer, simpler information on insurance products and guarantees offered to policyholders,” he said.

Berrigan said the EC will work more closely with the European Insurance and Occupational Pensions Authority to foster insurance product oversight and analyze consumer needs and trends in the post-COVID environment.


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