Industry duo propose Totus Re to address future pandemic risks

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The idea is proposed by Worry+Peace founder James York and Liz Foster who say that the current approach to managing super-perils is no longer sustainable

Insurtech Worry+Peace founder James York and Liz Foster, non-executive director at the Society of Insurance Broking (SIB), have come together to propose the idea of Totus Re, an open collective designed to pre-empt macro perils for any catastrophic pan-economic event.

The two hope it will lead to a more unified conversation about major coverage gaps in the market between government, society and the insurance sector.

Foster and York, who is also deputy chair of Insurtech UK, are now inviting colleagues across the insurance sector and partners in the UK government to join them on this collaborative mission.

They claim it can benefit society by protecting it as well as mitigating against the reputational hit that the insurance industry is currently facing.

Reinsurance umbrella

A statement about Totus Re said: “We acknowledge that they (super-perils) 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 [Re] and Flood [Re].

“Whilst the Covid-19 pandemic is an ongoing human catastrophe – affecting the entire economy and insurance sector – it has revealed the existence of what is best described as a clear and present society insurance gap. That being: the uninsured or uninsurable losses of a National Disaster Scenario.”

Both Foster and York agree that, while there is already some focus on creating a reinsurance platform backed by government for the next pandemic, this is not proactive enough.

“We must think beyond the current peril,” York said. “There will always be another sizeable aggregate event around the corner.”

The National Risk Register contains known and reasonable aggregate risks, but it does not consider other sizeable loss events.

York questioned at what point does the market exclude and the government include? What is society’s share of the claim?

“This triumvirate of uncertainty must be resolved,” he said. ”The UK has pioneered the insurance sector, let’s unite with government and society to solve the inevitable schism before the event.

“This task is not political. It is not embarked on with profit motive. It is a collective effort to open a dialogue and close the society insurance gap.”

“When that is closed, certainty is created. With certainty comes confidence – in our economy and our ability to endure the risks our society inevitably faces in the course of natural time,” he added.