IRDAI to form pandemic risk pool

IRDAI risk pool

In the wake of the pandemic, The Insurance Regulatory and Development Authority of India (Irdai) is expecting demand for new covers and is considering the formation of an Indian pandemic risk pool with contributions from the country’s insurers and reinsurers.


With business interruption and cyber risks to rise in the wake of the pandemic and the corresponding shift to work-from-home arrangements. The regulator is also considering the proposals of its panel which has recommended a business interruption cover. This will provide small businesses with up to 10 employees a minimum salary of Rs 6,500 for up to three months of a lockdown.

Speaking at a CII virtual seminar on learnings from the pandemic, Irdai executive director Suresh Mathur said, “IRDAI is considering the formation of an Indian pandemic risk pool with contributions from the country’s insurers and reinsurers. A pandemic pool is required to cover such risks because international reinsurers do not provide pandemic cover.”

Also read: IRDAI to cover hospitalisation due to adverse reaction to COVID-19 vaccine


“As remote working becomes a norm, insurers can expect changes in the workmen and employee compensation products to include features like workspaces ergonomics and work-life balance for employees. The effect of Covid on general liability will vary industry-wise,” said Mathur.

He added that this would also increase the demand for cyber insurance and further the evolution of cyber insurance products.

Mathur pointed out that the lockdown had resulted in business interruption covers taking centre stage. He added that while there will be pressure on insurers to settle claims arising out of business interruption, the impact on companies will depend on policy wordings.

Irdai had last year constituted a working group to explore the formation of an Indian pandemic risk pool. This was supposed to focus on risk to business continuity, reduction of stress on individuals, and address the issue of migrant labourers. The working group had suggested that the pandemic pool should be through public-private partnership and the capacity (capital) would be through premium collections from insurers, Indian reinsurers, and foreign reinsurance branches.

“The product initially will cater to the micro and small to medium enterprises. We want a product where salary protection would be covered up to three months or an actual lockdown period, whichever is less. It is envisaged that Rs 6,500 per month for a maximum of three months can be covered for a maximum of 10 employees per MSME,” Mathur added.

In the second phase, it could provide health insurance and enhancement of employees’ salary, and the third phase would include life insurance cover and higher salary cover.

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