Epidemics must be better understood
Studying infectious diseases is vitally important if insurers and reinsurers are to avoid getting caught out by the next outbreak of something like the Zika virus, the mosquito-borne virus linked to birth defects, according to epidemic risk modelling company Metabiota.
The company has been working with re/insurers to help them better understand the risks involved in widespread flu outbreaks, as well as any other virulent infectious disease.
Metabiota has been collaborating with Munich Re in particular in recent years, giving the reinsurer access to its epidemiological database that allows the reinsurer to create novel insurance products or simply improve capital utilisation and enterprise risk management.
“The collaboration began almost four years ago on the back of Metabiota’s history and commitment to delivering an innovative platform for monitoring and analysing epidemic risk,” said Megan Stewart Hodge, global head of business development, Metabiota.
“We have a team of epidemiologists who have a great deal of experience in their field, with true boots on the ground, covering epidemiology, data science, modelling and analytics. This provides us with a very differentiated platform.
“We have developed our robust analytics platform—initiated during our first development engagement with our keystone insurance client, Munich Re—which is more comprehensive in terms of scope and granularity than anything currently available in terms of infectious disease risk offerings.”
According to Hodge, studying these kinds of outbreaks is very important, as the underlying factors that cause epidemics to occur are increasing, both individually and collectively.
“When you look at changes in land usage, global transportation, migration and conflict, resource extraction, increased fresh water scarcity, temperature variability, and bioterrorism—all these facts are increasing the likelihood of an epidemic or even a pandemic,” said Hodge.
She pointed out that elevated risk has certainly resulted in economic loss. Much of that is uninsured at this time, but there is a significant exposure currently on the life side. According to Hodge one statistic that she has access to suggests the projected impact from a global human pandemic is around $592 billion.
There have been more than 400 human disease outbreaks in the past 10 years. On the life side, that means that there’s one of the largest exposures ever out there from a shock mortality loss.
Hodge said that Metabiota’s model and analytics can help companies to understand what that potential loss is and where it is coming from in terms of their own exposure, because there’s a potential significant loss on the life side. Much of that figure of $592 billion is uninsured on the P/C side.
She concluded: “What makes our offer so compelling, especially thanks to our work with Munich Re, is that we’re helping to create products that are ultimately going to help stabilise companies and industries, based on an ability to address the insurance gap.
“One example of that is the effect the Zika virus had on the tourism industry in Miami in 2016, much of which was non property-cat business interruption. If you look at the overall impact Zika had on Miami and what that did to small businesses and the hospitality segment, the reality is that there was a significant economic loss that was uninsured.
“The increasing potential for future loss occurrences, and the significant scope of ensuing human and economic loss, presents a compelling opportunity for the insurance industry to further examine these exposures from infectious disease events and create novel protection for companies.”
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