PANDEMIC RISK IS UNINSURABLE: SCOR’S KESSLER

Pandemic business interruption risks are fundamentally uninsurable, according to Denis Kessler, chairman and chief executive of Scor. In an article published in French newspaper Les Echos, Kessler argued that insurers do not have the capacity to absorb the loss accumulation of a simultaneous global event, while the political decisions to lockdown – which drive BI losses - cannot be modelled. He also noted that insurers would face the risk of adverse selection because only companies in the most affected sectors - hotels, restaurants, tourism – would buy pandemic insurance. “Only the government can cover the cost of the economic impact of such a major crisis, through redistribution mechanisms that spread the cost over all economic agents, and even over several generations. It’s not surprising then that to date no country has managed to develop a system whereby insurance covers this cost. It’s not about bad faith on the part of insurers, rather it’s a question of technical and economic impossibility,” Kessler said.