Aon and Munich Re have launched a pandemic reinsurance solution for Indonesia and the Philippines, targeting non-damage business interruption losses in the hospitality sector that are typically excluded from conventional property and casualty insurance policies.
The companies described the arrangement as a first-of-its-kind solution designed to provide dedicated pandemic protection in the two markets.
- Aon and Munich Re have introduced a pandemic reinsurance solution targeting non-damage business interruption losses in Indonesia and the Philippines.
- The solution combines indemnity-based coverage with parametric triggers, backed by Munich Re’s reinsurance capital, pricing expertise and policy wordings.
- The product addresses pandemic-related insurance protection gaps, particularly in hospitality, where conventional property and casualty policies frequently exclude such losses.
Pandemic-related interruptions remain a significant financial exposure for businesses, governments and communities. Outbreaks can disrupt trade, supply chains, tourism, hospitality operations and public services, creating losses even when there is no physical damage to insured property.
Conventional property and casualty policies generally exclude many pandemic-related business interruption exposures, although specific protection is available in segments such as medical and travel insurance.
Aon and Munich Re combine indemnity and parametric pandemic coverage
The solution gives Aon access to dedicated, highly rated reinsurance capacity for hospitality industry risks. Munich Re provides the reinsurance capital, pricing and policy wordings.
Its structure combines indemnity-based coverage with parametric triggers, intended to improve certainty over how protection responds to pandemic-related losses, subject to the applicable policy terms.
The arrangement was developed by Aon and Munich Re teams in Indonesia and the Philippines after identifying specific coverage requirements among clients in those markets.
Soeren Soltysiak, CEO of Asia, Reinsurance Solutions at Aon, said the COVID-19 pandemic exposed the extent of uninsured losses arising from business interruptions without physical damage.
The COVID-19 pandemic highlighted the protection gap for this peril, particularly for non-damage business interruption losses. It also reinforced the need for new solutions that help organizations build greater financial resilience and confidence ahead of potential future outbreaks.
Soeren Soltysiak, CEO of Asia, Reinsurance Solutions at Aon
“By combining specialist reinsurance capacity with a solution specifically designed for pandemic-related losses, we will help clients achieve greater clarity and confidence in how they can protect their balance sheets against possible future events.”
Pandemic insurance protection gap remains significant across Asia
Hitesh Kotak, CEO, Asia at Munich Re, identified pandemic-related losses as a major area of insufficient insurance protection in regional economies.
Pandemic risk remains one of the most significant protection gaps facing economies across Asia. This solution provides organizations in Indonesia and the Philippines with greater access to protection against pandemic-related disruption and supports their ability to recover and grow following future public health events.
Hitesh Kotak, CEO, Asia at Munich Re
The solution also addresses the challenges of insuring pandemic exposures that can affect multiple businesses and geographical markets simultaneously.
Dr. Gunther Kraut, Global Head of Epidemic Risk Solutions at Munich Re, said specialist insurance structures were necessary to manage the accumulation of pandemic-related risks.
Epidemic and pandemic risk requires robust approaches to risk sharing and capital deployment. Similar to other perils, affirmative specialist insurance solutions are required to help address the challenge of global risk accumulation. Munich Re is committed to supporting solutions that help clients manage the financial consequences of these events.
Dr. Gunther Kraut, Global Head of Epidemic Risk Solutions at Munich Re
Aon said the arrangement draws on its global Risk Capital capabilities to structure protection around specific client exposures.
The combination of specialist reinsurance capacity, indemnity coverage and parametric triggers is intended to improve the transfer of pandemic-related financial risks for hospitality businesses in Indonesia and the Philippines.
