Insurance: Irdai sets up panel to look into possibility of 'Pandemic Risk Pool'

Insurance regulator Irdai on Wednesday set up a working group to examine the possibility of setting up a 'Pandemic Risk Pool' to deal with the risks associated with disruption in economic activity following an outbreak of coronavirus-like health emergencies.

"There is a need to examine long-term solutions to address the various risks which have been triggered by the current pandemic and offer protection in case of a future similar crisis," the Insurance Regulatory and Development Authority of India (Irdai) said.

The nine-member working group to be headed by Irdai Executive Director Suresh Mathur will "explore the possibility of addressing these risks and any other related risks arising out of a pandemic through the mechanism of Pandemic Risk Pool".

The COVID-19 pandemic, which started as a public health emergency, has led to significant disruption in economic activity mainly due to the measures taken by the government to limit the spread of the disease.

The government had to impose a lockdown to check spread of the virus. It also provided huge fiscal packages to support the economy.

The pandemic has affected not only health but all sectors of the economy including manufacturing, aviation, tourism, transportation, construction, services, and agriculture, the regulator said.

"Some of the risks like business interruption losses without concurrent material damage loss; loss of employment would result in huge losses much beyond the capacity of government/ insurers/ reinsurers," Irdai said while announcing its decision to set up a working group on 'Pandemic Risk Pool'.

The regulator has taken several steps, including asking insurers to come out with specific policies for COVID-19, to provide relief to policyholders.

The nationwide lockdown imposed on March 25 has since been relaxed and economic activities have started picking up.

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As per the terms of reference given to the working group, it will study the need for setting up 'Pandemic Risk Pool' giving rationale for the same, recommend the structure and operating model for the pool and examine any other matter relevant to the matter.

The working group shall submit its report within eight weeks, Irdai added.