PARIMA opposes Retroactively Opening up BI Policies to Pandemic Risks

PARIMA chairman Franck Baron

The Pan-Asia Risk and Insurance Management Association (PARIMA) has joined the fast-growing body of opposition to legislative efforts in the US and elsewhere to try and open up business interruption (BI) coverage retroactively to pandemic risks that were excluded when originally underwritten.

The association has called on insurers and brokers across the Asia-Pacific region to rise to the huge challenge posed by the virus and show flexibility and partnership when dealing with customers as they struggle through the crisis. It seeks flexibility on premium payments and wants to see claims dealt with swiftly.

But it does not want to see BI policies opened up to risks that were not originally included and charged for, as it would undermine the very principle of insurance and pose a serious threat to the solvency of the sector. PARIMA believes instead that policymakers and the industry should focus on the creation of national and regional insurance pools to help cope with future health crises.

“The Pan-Asia Risk and Insurance Management Association has called for insurers and brokers across Asia-Pacific to come to the fore with the flexibility and partnership that is going to be necessary for corporations in the region to survive through the global pandemic and plan for recovery thereafter. In an unprecedented crisis, many companies are under great pressure and for some, it may be a question of survival,” it stated.

“In particular, PARIMA believes that insurers and intermediaries should endeavour to treat customers fairly and grant flexibility to business customers, as well as individual consumers, when reasonable and practical across both the timing and extent of premium payments and claims negotiations. The support of the insurance industry is going to be critical for businesses and it is paramount that businesses have continued access to insurance and are kept well informed as we navigate these uncertain times,” continued the association.

“PARIMA acknowledges that insurers are also under stress, and PARIMA is not in favour of regulators imposing retroactive coverage of claims that were not envisaged within contracts, as this could create material solvency risks for insurers. Regulators enforcing retrospective changes would jeopardise contract certainty and erode the trust needed to build a long-term and collaborative relationship – a relationship that will be essential for business in recovering from the pandemic,” added PARIMA.

“PARIMA is also strongly advocating for the creation of national/regional insurance pools for future pandemic risks. Such national/regional pools have been useful in responding to other severe and widespread risks, such as terrorism, and could prove to be equally relevant in dealing with a global pandemic exposure. PARIMA is prepared to provide an expert view from risk and insurance managers to support this cause,” concluded the association.