Two leading insurance figures are calling on the industry to unite behind a new open collective.
James York, deputy chair of Insurtech UK, and Liz Foster, non-executive director at the Society of Insurance Broking, have pledged to create Totus Re, which they describe as helping the “insurance sector and government better plan coverage for any catastrophic pan-economic event.”
“We the undersigned invite colleagues across the insurance sector, and partners in UK government, to join us on a collaborative mission to address the risk super-perils present to the UK,” it states. “We acknowledge that they expose the lack of coherent risk transfer between what the private insurance market capacity can underwrite and where the government’s role begins. This ‘Society Insurance Gap’ needs to be closed with certainty and via a replicable and sustainable sector-wide mechanism.
“It is not sustainable to expect the current pandemic response to set a precedent for national risk management. We therefore call for a ‘Totus Re’ to be compiled. A Government backed reinsurance umbrella for all known or foreseeable perils. Structured, cell by cell, including and appraising each risk in turn, and grouping the existing structures of Pool and Flood.”
It notes that while the coronavirus pandemic is a human catastrophe that impacts the entire economy and insurance sector, it has also highlighted the ‘Society Insurance Gap’ – i.e. the uninsured or uninsurable losses of a natural disaster scenario.
“As some focus on creating a reinsurance platform backed by government for the next pandemic, we believe this isn’t proactive enough,” it states. “We must think beyond the current peril. There will always be another sizeable aggregate event around the corner.
“The National Risk Register contains known and reasonable aggregate risks. Yet, even that does not contain considerations for other sizeable loss events. These may sound far-fetched, however, that makes it all the more reasonable to raise them, discuss them, and plan for them. If we are to patch the pandemic risk gap - why stop there?”
It calls for the government and society to unite to solve issues such as the point at which the market excludes and the government includes, and what society’s share of the ‘claim’ should be.
“With certainty comes confidence - in our economy and our ability to endure the risks our society inevitably faces in the course of natural time,” it concludes.
The group also includes Brian Weetman, Katherine Mitchell and Lynn Richards-Cole. Further processes will be announced in the near future.