Building pandemic 

resilience through public–

private partnership

Federal Advisory Committee on Insurance

September 9, 2021

A business of Marsh McLennan
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A new public–private partnership

In our new report, we present our view that a public-private partnership is 

essential to containing the effects of the next pandemic or epidemic. 

Our bottom line: Existing insurance solutions — and insurers alone —

cannot fully protect businesses from the potentially sizable losses they 

could incur during the next pandemic or epidemic.

Given the complex nature of pandemic risk, a strong public-private 

partnership is required to effectively manage it and enable our economy 

to build the resilience it needs for the future.
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Reported $26B

IBNR $18.9B (43% of 

total)

$40-80B

$30-60B

$31-86B

$30-97B

Up to $107B

Up to $50B

Up to $50B

$30-100B

$50-70B

$56-90B

Up to $100B

$30-55B

Up to $30B

Average:

~$61B

$0

$20

$40

$60

$80

$100

$120

Insured Losses ($ Billions)

The pandemic’s insurance implications

Despite what ultimately may turn out to 

be substantial COVID-19 claims payouts 

from insurers, policyholders have often 

found little comfort in property and 

liability policies.

Insurers have asserted that their policies are 

not designed to protect against the broader 

economic implications of pandemics — and 

are now explicitly excluding communicable 

disease coverage.

Estimates of insured COVID-19 losses have varied significantly.

Sources: Guy Carpenter analysis, Dowling, Autonomous Research, Barclays, Bank of America, KBW, UBS, Lloyd’s, Wells Fargo, Goldman Sachs, Berenberg, Moody’s, and JP Morgan; updated as of August 17, 2021.

*Represents consolidated COVID-19 losses tracked by Guy Carpenter’s Business Intelligence team as of August 17, 2021, accounting for end of period foreign exchange rates.

**Lloyd’s estimate is for underwriting losses from COVID-19, including claims and anticipated lower profits due to lower premiums.

$44.9B
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Shrinking capacity, narrowing terms and conditions, and 

intensifying underwriting scrutiny

• Insurers are concerned about claims developing 

potentially years after alleged exposure or injury.

• Some insurers have sought to added communicable 

disease exclusions to their policies.

– Policyholders are concerned that insurers’ proposed 

language may be overly broad.

• Underwriters are applying greater scrutiny to all GL and 

umbrella/excess risks.

• Capacity has fallen more than 30% amid the pandemic.

– Several large underwriters have exited the market.

• Deductibles of 10% to 20% of insured sums are now 

standard for small to midsize outdoor events.

– Coverage for indoor events is available without such 

deductibles, but with significantly higher pricing.

• Communicable disease coverage is now widely 

unavailable — and expected to remain so going forward.

• Insurers have denied pandemic claims, citing a variety 

of reasons, including:

– The asserted absence of a physical damage trigger.

– The invocation of pollution/contamination and virus 

exclusions and other policy language.

• Nearly 2,000 COVID-19 coverage lawsuits had been 

filed through July 26, 2021.

• Capacity has rebounded somewhat from the initial 

shock of COVID-19, but communicable disease 

coverage remains restricted.

• Underwriters are concerned about pandemic effects on 

distressed companies and challenged industries.

• COVID-19 has sparked a limited number of securities 

claims, including some related to:

– Its economic impact.

– An alleged failure of company leadership to 

adequately address workplace safety concerns.

• Insurers are generally not imposing pandemic-related 

coverage restrictions.

• Workers had filed more than 3,000 COVID-19-related 

suits as of August 19, 2021, alleging retaliation, 

discrimination, and failure to properly track time.

• While pandemic-related coverage restrictions have not 

been commonplace, insurers are scrutinizing risks and 

probing employers about:

– Reductions in force.

– Vaccine mandates.

– Plans to return employees to workplaces.

• 20+ states have introduced “rebuttable presumptions” 

that employees in certain professions who contract 

COVID-19 have been infected while working.

• While insurers cannot explicitly exclude coverage for 

occupational illnesses, they are:

– Seeking to eliminate “same communicable disease” 

endorsements.

– Choosing not to underwrite certain employers with 

significant communicable disease risk.

Sources: University of Pennsylvania, Oliver Wyman, Fisher Phillips, Marsh analysis

Event cancellation

Property/business interruption General liability and umbrella/excess Workers’ compensation

Directors and officers liability Employment practices liability
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A public-private partnership to establish a pandemic reinsurance 

program can offer substantial benefits.

A pandemic risk insurance facility can:

• Help limit — but not eliminate — private sector risk.

• Absorb much of the initial shock of a future pandemic.

A public-private partnership can range from a pure private partnership to a statefinanced fund for noninsurable risks.

Policymakers can look to existing risk pooling schemes in the US and elsewhere 

for models, and learn valuable lessons from them.

A new pandemic risk solution

Working together to manage 

pandemic resilience

Insurers, the private sector, and 

governments can work together to 

improve resilience and preparedness.

• Insurers can help businesses use 

data to understand risk and enact 

practices to prevent losses.

• Governments can apply lessons 

from COVID-19 to better ensure 

readiness for a future event.

• Businesses can take a forwardthinking approach to risk.
We are leaders in risk, strategy and people. One company, with four global businesses, 

united by a shared purpose to make a difference in the moments that matter.

A business of Marsh McLennan

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