Séminaire COURNOT – Sandrine Spaeter-Loehrer (Université de Strasbourg, BETA)

Détails de l'événement :

“How to reconcile pandemic risk and insurance coverage ?”

Résumé : In the face of major risks, the financial capacities of the private insurers are rapidly reached. Thus, reinsurance is used to ensure an acceptable (and also imposed by regulation) solvency ratio, and to allow for adequate claims indemnification, at least up to some predefined ceilings. In this context, even standard reinsurance may be limited. For major risks such as natural catastrophes, a risk transfer can be operated to the financial markets through securitization. The today well-known cat bonds, cat options, swaps permit the subscriber (a state prone to earthquakes, to forest fires ; an insurer exposed to different major risks) to win on the financial market while loosing on the physical one following a cat. A pandemic is a cat. It kills, it destroys economic value. But much more rapidly as for nat cats, insurers and reinsurers ‘ financial capacity become  insignificant to cover the financial consequences of a pandemic. Unfortunately, securitization, while it complements well a nat cat risk management strategy, cannot be identically replicated for a pandemic cat. In this paper, we discuss the main differences between  natural hazards (also technological disasters) and pandemic  catastrophes. Risk correlation, moral hazard, failure of world mutualization are mainly at stake. Then we propose a coverage strategy of the pandemic risk that combines different risk management tools, each being mobilized with regard to their opportunity cost and their management costs. They are also discussed in the frame of an optimal (hybrid) governance ; The challenge being to make interact private/public sectors, regional/national levels, national/international institutions in a same pandemic risk management regime.