Aon and Munich Re launch parametric pandemic solution for Indonesia and the Philippines

Broking group Aon and global reinsurer Munich Re have launched a first-of-its-kind parametric pandemic reinsurance solution for clients in Indonesia and the Philippines, designed to address specific coverage needs identified across both markets.

The pandemic solution aims to assist companies in managing and addressing non-damage business interruption losses that result from a pandemic, a risk often excluded from numerous property and casualty insurance policies, with the exception for areas like medical and travel insurance.

In addition, pandemic risk continues to pose a significant threat to governments, businesses and communities, with the potential to disrupt trade, supply chains, travel, hospitality and public services at a substantial scale.

Under the solution, Munich Re will provide the reinsurance capital, pricing and wordings, enabling Aon to access dedicated highly-rated pandemic capacity for clients’ hospitality industry risks.

By combining indemnity-based coverage with parametric triggers, the solution is intended to provide greater clarity and confidence around coverage response, subject to policy terms, while also supporting a more efficient approach to risk transfer.

“The pandemic solution reflects Aon’s ability to bring together its global capabilities across Risk Capital to structure solutions for evolving client needs, and support greater resilience against emerging and interconnected risks,” Aon explained.

Soeren Soltysiak, CEO of Asia, Reinsurance Solutions, Aon, commented: “The COVID-19 pandemic highlighted the protection gap for this peril, particularly for non-damage business interruption losses. It also reinforced the need for new solutions that help organizations build greater financial resilience and confidence ahead of potential future outbreaks. By combining specialist reinsurance capacity with a solution specifically designed for pandemic-related losses, we will help clients achieve greater clarity and confidence in how they can protect their balance sheets against possible future events.”

Hitesh Kotak, CEO, Asia, Munich Re, said: “Pandemic risk remains one of the most significant protection gaps facing economies across Asia. This solution provides organizations in Indonesia and the Philippines with greater access to protection against pandemic-related disruption and supports their ability to recover and grow following future public health events.”

Dr. Gunther Kraut, Global Head of Epidemic Risk Solutions, Munich Re, added: “Epidemic and pandemic risk requires robust approaches to risk sharing and capital deployment. Similar to other perils, affirmative specialist insurance solutions are required to help address the challenge of global risk accumulation. Munich Re is committed to supporting solutions that help clients manage the financial consequences of these events.”