Time for a Re-think?: Risk in Insurance Markets

WPI Economics was commissioned by the Institute and Faculty of Actuaries to investigate the implications of a government guarantee to protect low income households through the use of Flood Re style schemes; as well as reinsurance vehicles underpinned by the state to support public policy goals around societal management of risk. Further analysis explores other potential policies which could deliver similar objectives in relation to both the Great Risk Transfer and the Poverty Premium.

In this report, WPI Economics recommends that:

• The IFoA should work with stakeholders to identify future cases for the framework outlined within;
• The Government should engage with industry discussions to develop a Pandemic Re for Business interruption cover;
• By addressing the monthly premium penalty, the IoFA can indicate means of tackling the poverty premium. It is also noted that due to the lack of feasibility, a Postcode Re should be avoided as a solution;
• Rather than a ‘Health Re,’ group and affinity protection schemes should be explored to improve levels of insurance protection against health problems.

You can read the full report here.