Prepare for the next infection

The COVID-19 pandemic has exposed the world’s vulnerability to infectious diseases, which many thought were a thing of the past. As the world moves into an uncertain post-recovery phase, experts know it’s only a matter of time until the next pandemic hits, and everyone should be prepared.

According to Dr Gunther Kraut (pictured above), head of the world of disease risk solutions Munich Re Group, what we think of as “after the disease” is the same time as “before the next disease,” which is why preparation is important, especially when it is seen the economic impact caused by COVID.

“In the past several years, the frequency, severity and economic impact of the events have increased, and will continue to increase, the need for a strong risk management plan while didn’t show another major infection,” Kraut said. Corporate and Insurance Risks. “Especially better ways to increase resilience and preparedness – if there’s one lesson, it’s (that) change is needed for better preparedness.”

The COVID-19 pandemic has been called a “black swan event,” but Kraut disagrees, instead calling it a “grey rhino event.” as did Michele Wucker – a high-risk, high-impact threat, but ignore non-emergency threats. Instead, it happens after a series of warnings and visual confirmations.

“The establishment of better risk management systems for diseases and infectious diseases is very important, to protect the workers, to protect the business, and – if you want – in addition, not only this,” Kraut said.

While disease awareness is currently at an all-time high, Kraut says there are many important factors to consider for the development of the insurance market – both supply and demand. .

“It is clear that the biggest challenge for ensuring disease and epidemic risks is the accumulation of risks worldwide, that is, the occurrence of losses worldwide at the same time,” he said. said. “As a result, the market for traditional insurance products has no choice but to completely exclude infectious diseases from their terms and conditions. This is not a new understanding, but the difficulty of implementation has increased and there is no way back. This provides disease and disease insurance in the field of special information, which can ensure and clearly accumulate savings for insurance companies.

The COVID-19 has created the need for many special insurance items, such as business interruption, excess or cancellation.

“However, on the demand side, capacity remains the key question,” Kraut said. “This is due to the high expected loss from disease and disease in the future. So, for companies, the challenge is to develop a good risk management strategy that integrates insurance and other risk management tools.

In general, Kraut describes the market as a shift from expanding knowledge to the pursuit of protection from the next big disease. In addition to providing information for large companies, he said that Munich Re is increasingly cooperating with primary insurance companies to develop and promote selected and sustainable disease risk offerings.

Insurance against disease and disease risk

According to Kraut, the disease and disease coverage of Munich Re’s offering provides more information for the economic damage caused by severe infections. Economic damages can include loss of profits, additional costs needed to continue operations and/or additional time to pay interest on financial obligations. He said that the quick release of capital is the key to help businesses survive the economic crisis. Insurance is available for many industries and there really isn’t a prominent business segment among Munich Re’s customers, he said.

“The establishment of policies usually depends on a simple and clear definition of the epidemic, such as the World Health Organization announcing a Public Health Emergency of International Concern, the highest level which is the vigilance under the International Health Regulations,” said Kraut. . “Reflecting the time frame of a long-term disease is also important to make a correct policy without an insurance gap in terms of renewal.”

Kraut stressed that the transfer from abroad through insurance is only one part of managing the risks of the disease, and organizations must implement a comprehensive plan to manage the risks.

“Implementing an insurance program also helps companies implement a risk management policy to ensure regular monitoring of this risk,” said Kraut. “However, trying to insure all possible losses in the economy is not a good use of capital for risk and a high level of loss.”

Dealing with such a large risk requires cooperation between the public and private sectors. According to Kraut, the finance ministers of the Asia-Pacific Economic Cooperation forum have officially approved the proposal to implement a risk management system through a public-private partnership.

“The use of the country is increasing in different regions,” he said. “The disease risk market structure provides a basis not only for the integration of different sources of capacity, that is, many shoulders to help carry the risk, but also to discuss the affordability through the integration of various financial instruments – especially insurance and special loans.”

Currently, many businesses have not made significant preparations and responses to infectious diseases. Kraut believes they should do it quickly.

“To model the dramatic increase in time for large epidemics, you can only look at one part of the coronavirus,” he said. “Three major events of new diseases have emerged within a period of 17 years – SARS, MERS, and COVID-19.

“Something has changed in the last few years and we’re talking about percentages of probability every year. This is consistent with the risk models that are opportunities, both in business and sales, some of them published numbers of about 3% each year. And this is the reason why we must prepare for the next epidemic. “

How is your organization preparing for a pandemic? Let us know in the comments.

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