The terms of reference for the working group include setting up a pandemic pool, recommending the structure and operating model for the pool.
The Insurance Regulatory and Development Authority (Irdai) has constituted a working group to study the feasibility of forming a pool to address the risks arising out of a pandemic. The panel will submit its report in eight weeks.
The lockdown to check the Covid-19 spread led to huge losses in businesses, but companies could not claim damages as their insurance cover didn’t include loss from damage to property, which is essential for “loss of profit” clause to get triggered in business interruption losses.
Insurers have been suggesting that the only way business interruption losses can be taken care of in a pandemic is by forming a pool.
“There is a need to examine long-term solutions to address the risks triggered by the Covid-19 pandemic and offer protection in case of a future similar crisis,” the insurance regulator said.