A Framework for Defining a Role for Insurers in “Uninsurable” Risks: Insights from COVID-19

Photo by Daniel Schludi on Unsplash

Howard Kunreuther and I recently collaborated to develop a decision-making framework for evaluating strategies for dealing with the impacts of risks traditionally considered uninsurable — such as COVID-19.

This article is available here from the NAIC’s Center for Insurance Policy & Research.

While many have viewed insurability as a binary choice with respect to a risk (i.e., insurable or uninsurable), insurability is more appropriately considered on a continuum, ranging from easy-to-insure, such as automobile or life insurance, to difficult-to-insure, such as pandemic, loss of the electrical grid, and other extreme catastrophic risks.

As explained in this article, insurance should be part of a risk management strategy to support businesses, non-profits, and local governments to address the risks they face — even if those risks are difficult to insure by traditional measures. The insurance industry can play an important role either through the continued development of ad hoc state-by-state initiatives, a private-public partnership in which the insurance industry commits its servicing capabilities, or a private-public partnership drawing on both its servicing and risk-bearing capabilities. The recent pandemic offers an opportunity to examine the role of insurance in providing protection and reducing losses from other catastrophic and systemic risks facing society today.




Founder and Managing Member of Centers for Better Insurance, LLC

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Jason Schupp

Jason Schupp

Founder and Managing Member of Centers for Better Insurance, LLC

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