A Newport Beach, Calif.-based specialty broker believes that now is the best time to start offering pandemic insurance.
Elite Risk Insurance, which specializes in bespoke risk, is offering Pandemic Outbreak with COVID-19 Relapse coverage with limits from $2 million to $25 million, and reportedly has another $250 million in capacity coming.
At first glance, the policies sound like they belong in the parametric product category. But that’s not exactly correct, according to Jeff Kleid, the firm’s owner. “It’s using parametric style solutions,” said Kleid, who would only say he’s working with a U.S. domiciled fronting insurer, declining to offer the name of the company.
Elite Risk isn’t alone in hoping to fill pandemic risk needs. Last week, Boston-based One80 Intermediaries said it is offering a pandemic policy as well.
Elite Risk’ has quoted a few dozen policies and has so far sold one – in the film and television industry at the beginning of July – with several orders to complete the underwriting process and place coverage, according to Kleid.
The premiums are high, coming in at between 8% to 15% of coverage. That means this isn’t the solution for all businesses.
“It’s really for the right buyer,” Kleid said.
Since the product only recently launched, there are no claims to report yet.
The coverages for Elite Risk’s policies are for named perils with specific max amount payouts, and are divided into entertainment and non-entertainment categories.
The entertainment policies have three triggers: Civil authority (a state-ordered shutdown for example); cast coverage (for example, if a named cast member gets COVID-19); and imminent peril.
There’s an indemnity component to the policy, so the payout on a claim may vary. If a claim is triggered when, for example, a cast member of a movie tests positive for COVID-19, the payout depends on how far into the movie production has gotten, and how essential to the development of the film it is to shoot more scenes with that cast member.
“Ours is kind of a hybrid parametric indemnity,” Kleid explains.
The policy covers any pandemic outbreak, including a COVID-19 relapse.
Kleid described it as “a standalone pandemic policy,” with the limit currently up to $3 million, however Elite Risk is working on setting up excess capacity of $10 to $20 million.
A similar non-entertainment policy has limits based on risks, with limits up to $25 million for sectors like agriculture, defense, healthcare and transportation.
These policies have a specific COVID-19 relapse 60-day waiting period.
Kleid said that so far he’s quoted this product to a group of small hotels, whose biggest risk currently is a government-ordered shutdown.
They are also speaking to restaurant chains, and livestock companies about the product, he said.
Kleid said he recently got access to a Lloyd’s syndicate for about $250 million in capacity through his London-based partners.
“Yesterday I was informed we now have access to a several hundred million dollar pool of pandemic cover that’s coming back online,” he said.
However, with all that’s going on – and with all that could still come – that may not be enough.
“We need more capacity,” he said.
The Boston-based national wholesale insurance broker One80 Intermediaries is offering what it says is “among the first and most accessible” insurance policies for commercial risks arising from pandemics and epidemics.
The policy, Pandemic Protector, is underwritten in the London market and exclusively available from One80 Intermediaries. Pandemic Protector provides non-damage business interruption insurance for loss of gross profit due to a future epidemic and/or pandemic outbreak. It will cover future outbreaks of both known and unknown diseases.
Tech firm Machine Cover aims to offer policies next year that would give relief during lockdowns.
Chubb recently unveiled a proposal for the insurance industry and federal government to partner on covering future pandemic-related business interruptions. And Lloyd’s has started work with three insurtech startups to help the market respond to the COVID-19 pandemic.
- How to Prepare for the Next ‘Black-Swan’ Event? Lloyd’s Has Some Suggestions.
- Insurers Are Creating Products for World Where Pandemics Could Become New Norm
- Specialty Broker Offers Business Insurance Coverage for Pandemic, Epidemic Risks
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