Munich Re to stop covering businesses against pandemic losses: reports
By Charlie Wood
Global reinsurer Munich Re will no longer be providing cover to businesses against pandemic losses, according to reports from Bloomberg.
This comes after the company took a €1.5 billion hit in the first half of 2020 as a result of the the COVID-19 pandemic.
Upon the release of its financial results earlier this year, Munich Re said most significant losses were related to the cancellation or postponement of major events, and to a lesser extent in other lines of P&C business, such as business interruption.
Excluding COVID-19, and Munich Re actually reported lower-than-average major losses in the second-quarter of the year, and also a good performance at ERGO, both of which served to bolster its net result for the period.
“We are currently examining whether we will offer new contracts that include pandemic protection in property and casualty insurance in the future,” Torsten Jeworrek, Munich Re’s head of reinsurance, said in an interview with Bloomberg.
The company will reportedly continue to cover pandemics in its life and health contracts.
Jeworrek added that he’s cautious about estimating potential losses in the second half given uncertainty about what will happen in the autumn.
“We could be running into a critical time again, for example if there are new lockdowns,” he said. “We will probably work through the majority of Covid losses this year.
“This is also due to the fact that the insurance contracts concerned usually have a term of one year, and we are currently not issuing any additional pandemic coverage. So that should run out.”
Munich Re this week argued that pandemic risks are “not insurable by the private sector alone” and endorsed the use of state-backed risk pools to mitigate their impact.
The reinsurer noted that the coronavirus pandemic has highlighted how vulnerable the world still is to very large risks, and that more prevention measures and risk transfer instruments are needed to make societies more resilient.