Pandemic Re risks creating ‘society insurance gap’, says Totus Re

Totus Re, founded by James York and Liz Foster, has urged the UK government and the insurance industry to consider the whole range of perils catalogued by the National Risk Register rather than focusing solely on pandemic risk. 

This is because commercial insurance will only ever be able to support a small, societally sub-optimal sliver of the risks on the National Risk Register, resulting in a ‘Society Insurance Gap’.

The perils on the National Risk Register range from emerging cyber risks to the risks associated with extreme natural hazards and climate change, rightly considered ‘uninsurable’ in the tail, but partially insurable if equitably supported by the state.

And Foster said that while Totus Re is fully supportive of the Pandemic Re steering group, it does not go far enough, and she urged the industry not to fall into the trap of simply adding a pandemic silo to the government’s ad-hoc architecture of guarantees and backstops in a game of endless whack-a-mole.  

“Thinking about pandemic risk as part of a broader universe of systemic risks facing society is not to say that Covid-19 does not present urgent and unprecedented challenges,” she said. “As such, we are wholly supportive of the ‘Pandemic Re’ steering group established by Stephen Catlin,. We are encouraged by the prospect of the industry uniting behind a single proposal to bring to government. 

“Broadly, our aims are complementary: a partnership with the state to enable (re)insurers to viably ensure that the products that businesses will need to more successfully weather the next national crisis, are available and affordable.”

Totus Re is aiming to make a specific intervention in the industry’s response. Namely, to advocate for a public-private arrangement that addresses chronic underinsurance and low resilience against a range of catastrophic perils in the UK, rather than the isolated symptom – the risk from pandemics – from which we are all currently reeling.