To the man on the street, the insurance industry didn’t cover itself in glory in the pandemic’s early phases, moving quickly to restrict coverages and exclude Covid-19 risks, then disputing lockdown business interruption claims. But now specialty (re)insurers are playing a much more active role in supporting the gathering economic recovery, particularly by underwriting the vaccine race.
“Today, the insurance industry stands ready to help facilitate the global rollout of Covid-19 vaccines in the fight against the pandemic,” said Scott Gunter, CEO of AXA XL. “Playing our role in society is a key priority for us; therefore, we’ve made capacity available specifically to help assist in the delivery of the global vaccination programme through various initiatives.”
The insurance industry stands ready to help facilitate the global rollout of Covid-19 vaccines.

In August 2021, Marsh announced a new insurance structure, which includes Axa XL, set up on behalf of the Global Alliance for Vaccines and Immunizations (Gavi), a public-private partnership, supported by the World Bank and the World Health Organization as well as Bill and Melinda Gates, that donates vaccines to the world’s poorest countries,.
It provides Gavi with credit risk protection against 21 undisclosed countries in Africa, the Americas, Asia, and Continental Europe that are paying for their own Covid vaccine procurement through the Covax Facility. Gavi’s involvement in these new financial relationships, rather than its usual role of donating vaccines, forced it to find insurance protection so that it isn’t left with a large bill from pharmaceutical companies if any of the countries default.
“These countries are paying their own way, and for that reason, Gavi was, for the first time, taking sovereign credit risk on those countries,” said Stephen Kay, Global Head of Political Risk at Marsh Credit Specialties.
Working with an NGO like Gavi is a different experience from the usual commercial broking relationships, Kay explained. “This project offered a big opportunity to do something good for the world,” said Kay
“Within that list of 21 countries, there was a lot of variation in sovereign risks, which could have provided an opportunity for an insurer to cherry-pick. We saw an accommodation by those partners to stretch their risk appetite in their willingness to be part of a solution.”
Vaccination Cover
Tim Galloway, Life Sciences Portfolio Manager at QBE, is underwriting bodily injury cover for governments’ vaccination programmes. Typically, an individual insurer might step in once payments reach $5 million, offering capacity for the next $10 million of payments, he explained.
“The focus is on those rare instances of more serious side-effects of bodily injury or permanent disabilities. As insurers, we have a certain appetite, while managing accumulation risk [but also] ensuring we’re providing solutions that the insureds want.”
Another initiative announced by Marsh in April, with Chubb as lead insurer, provides cover of up to $150 million against the risk of rare but serious adverse events associated with vaccines distributed by Covax to 92 lower-income countries. By the end of 2021, Covax aims to deliver up to 2 billion doses of vaccines to all participating countries, including up to 1.7 billion doses to these 92 eligible countries.
Insuring the Jabs
This project offered a big opportunity to do something good for the world.

In December 2020, Lloyd’s launched the Global Health Risk Facility (GHRF) with cargo insurer Parsyl, including a new public-private syndicate-in-a-box, Syndicate 1796. The GHRF was created to help protect and support the global distribution of Covid-19 vaccines as well as critical health commodities for developing countries.
“AXA’s involvement in the GHRF is threefold,” said Gunter. “We’re one of the risk carriers, with a share of 10% in the facility. We’re managing local policy issuance and orchestrating the complex Global Program set up for multi-country deals. And we’re combining our risk management expertise with Parsyl’s IoT technology in data collection to identify and assess the various transportation and storage risks involved and provide local authorities with recommendations and insights into the effectiveness of supply chains.”
Insurers often cite a lack of data for not covering new threats, such as Covid. Accelerated clinical trials, for example, have been a challenge to underwrite, with so little data on new vaccines. But now strong data is coming through to offer underwriters — and the public — confidence that adverse reactions are rare.

“There is hesitancy to underwrite new drug trials until you start getting more analytics and data,” said Galloway. “When the trials for new Covid vaccines started, for example, it was difficult to insure them until regulators, such as the US Food and Drug Administration, had given their approvals.”
One feature of the GHRF initiative is the Risk Management Accelerator (RMA), a separately funded initiative by participating syndicates and donors that is supported by Axa XL’s risk consulting services arm. It provides funding and services for GHRF clients to access better data and risk mitigation solutions to strengthen the vaccine supply chain.
In April, Aon launched an innovative new solution that will provide supply chain protection for global Covid-19 vaccine shipments, which AXA XL is also involved in.
“The offering uses sensor data and analytics, this time to enhance all risk marine cargo insurance with timely payment for doses that fall outside of the agreed-upon temperature range while being transported or stored, enabling more effective risk management and claims support,” said Gunter.
Helping the Global Rebound
Product innovation is not restricted to the vaccine race itself, but also includes supporting the broader economic recovery. In August 2021, Lloyd’s partnered with the UK government to launch the Live Events Reinsurance Scheme, a government-backed initiative to boost the events sector.
In the US, TigerRisk has developed a product for the country’s similarly-beleaguered entertainment industry. Since insurers began excluding communicable disease from all insurance policies, the film and TV industry could not secure fresh funding for productions, effectively bringing it to a standstill.
“While larger production companies were able to self-insure, the smaller independent film producers were forced to search for coverage which did not exist,” said Rod Fox, CEO of TigerRisk Partners.
“TigerRisk was able to find capacity for a ‘live cat’ product developed by specialist entertainment MGA, SpottedRisk, which saw an opportunity in the midst of the major market disruption to offer coronavirus cover for film production companies,” he said.
While larger production companies were able to self-insure, the smaller independent film producers were forced to search for coverage which did not exist.

The product launched in late August 2020 with limits ranging from $1 million to $20 million for each production. It covers cast and crew against sickness and death, and if a government shuts down a production on health grounds, paying for the extra expenses incurred, or if the production had to move locations or wait for the lockdown to lift.
Fox emphasises a focus on building up strong data and analytics for the product, as well as the attractiveness of short insured periods of up to 90 days, meaning that capacity can be recycled roughly four times per year.
“The product has meaningful-sized deductibles and a strong alignment of interest as nobody wants the risk and delay of a claim,” he said. “Also, the film and TV industry is often deemed an ‘essential industry’ by the local government where they are shooting, and [so] will often subsidise film production because it supports job creation. Therefore, there is an incentive to recognise the risk management measures in place and allow filming to continue.”
Stepping Up, Not Back
Fox is upbeat that the market has begun to innovate through Covid rather than retreat from it. “At the beginning of the pandemic, no insurer was prepared to provide capacity for Covid risk. We believe the industry has been effective at finding ways to manage risk and make sensible underwriting decisions, and there will always be sophisticated capital to support innovation.”
Gunter believes the collaboration achieved has been remarkable. “All the initiatives we’re involved in are highly collaborative undertakings, and it’s great to be a part of an industry that’s stepping up to help tackle this global crisis,” he said.