Professor Paula Jarzabkowski awarded UKRI grant for new project to support post-pandemic recovery.
Published (Updated )
Cass Business School has been awarded a prestigious Covid-19 grant from the Economic and Social Research Council (ESRC), which is part of UK Research and Innovation (UKRI), for a new project which will support the UK’s economic response and recovery from the pandemic.
The study, entitled ‘Risk sharing mechanisms to mitigate the economic consequences of pandemics: mobilising insurance expertise & capital to provide solutions for the UK’, will also be conducted with Birkbeck, University of London. The industry partners will include the Association of British Insurers; the Government Actuary’s Department; Flood Re; Pool Re, and the Confederation of Business and Industry.
The pandemic is causing business interruption (BI) across UK businesses, resulting in unprecedented widespread and global economic losses that are too large to be absorbed in full by the insurance industry. Yet, businesses are unlikely to be able to continue trading without access to adequate BI insurance. As the government steps in to protect businesses, the burden for taxpayers is rising exponentially. This study will consider novel solutions for risk-sharing mechanisms to effectively share pandemic BI risk between UK businesses, insurers and government.
The Cass and Birkbeck researchers, led by the internationally renowned reinsurance expert Professor Paula Jarzabkowski, will work with the industry partners to develop a BI risk-sharing mechanism, evaluate and build upon current post-lockdown products being generated by insurers, and develop new solutions with this full range of stakeholders. This will enable delivery of a sustainable longer-term governance and funding solution for supporting UK business against interruption from current and future pandemic.
The project will release interim outcomes and make its final recommendations in August 2021.
Professor Paula Jarzabkowski said she was delighted to receive the funding:
“The pandemic is too systemic to be covered by the insurance industry, and yet we will need insurance to enable business to keep trading, and to help kickstart our economy following the lockdown. We therefore need to look at ways to share risk between businesses, the insurance industry and the government.
“This is vital to give business the confidence to trade and allow the economy to recover, particularly while we deal with the uncertainty of future pandemics alongside all the other types of losses from which we will need insurance protection.
“While the government is currently acting as the ‘insurer of last resort’ and simply putting taxpayers' money into keeping businesses afloat, a properly planned ex-ante insurance mechanism would allow at least some of this loss to be paid by the insurance industry and also enable governments to identify additional support for future pandemics.”
Chris Paterson, Actuary, Government Actuary’s Department, said:
“We work on a variety of insurance arrangements which straddle the public and private sectors in different ways. We’re looking forward to collaborating with Cass Business School and the other organisations to come up with new ways of doing this to support the UK's economic recovery."
Andy Bord, CEO at Flood Re, said:
“Flood Re welcomes this initiative.
There is much work to be done to establish the role of insurance against any future pandemic outbreak and we look forward to supporting Cass Business School using the expertise and insights we have developed at Flood Re whilst successfully managing a reinsurance scheme from inception through to the effective protection against catastrophe.”
Huw Evans, Director General, ABI, said:
“We fully support the need to discuss how the economy can be better insured against pandemics and welcome this project.
“Partnerships between the public and private sector have been key to resolving such challenges in the past and Cass Business School excels in studying how these work throughout the world. We look forward to collaborating with them, as well as the Government and other partners, to find new solutions.”
Julian Enoizi, CEO Pool Re, said
“There is a real opportunity to ensure that the Insurance Industry is better equipped to help in future Pandemic events. We know that the work being undertaken by Cass Business School, Government and other partners will be instrumental in helping us shape our future response to economic shocks. Pool Re is an example of a successful collaboration between the public and private sector and we are a delighted to able to support this initiative.”
Find out more about Professor Jarzabkowski’s research.