FERMA: Insurance has failed businesses

Insurance has not provided the support organisations need for their business interruption throughout the coronavirus pandemic, something the EU should help address to avert future crises, according to the Federation of European Risk Management Associations.

FERMA proposes that the EU play a part in encouraging corporate risk and insurance managers to promote greater risk awareness amongst SME suppliers, drive a more effective business continuity management culture, and even help create a public-private financial solution for NDBI for pandemic and other major cat risks.

According to a report published today by the risk body, European risk managers have been successful in maintaining the continuity of their organisations during the COVID-induced crisis; they have participated in task forces and crisis units, promoted communication, supported new working practices, pursued insurance recoveries where possible and begun work on recovery.

The report, Risk Management, Recovery and Resilience, is the first Europe-wide examination of risk and insurance management during COVID-19.

Commenting on the findings, FERMA president Dirk Wegener: “Most respondents felt their organisations were largely or fairly well prepared to manage the pandemic, although at that stage, a majority said their organisations had suffered negative operational and financial impacts from the pandemic. We could not anticipate the full impact of government lockdowns and other control measures. When we have a longer perspective, we believe that we will see the value of flexible risk management tools, such as business continuity plans, in business resilience and recovery.

“Insurance, unfortunately, has not provided the support organisations need for their business interruption. There is a strong appetite for a future financial solution. We have a long relationship with the insurance industry. We want it to be part of a solution by contributing not just risk transfer but also risk expertise to a combined public-private initiative.”


Risk management responds (Source: Risk Management, Recovery and Resilience, FERMA)

• More than 30% of respondents were involved in creating and implementing their organisation’s COVID-19 crisis management; 17% led the process. More than 20% have been involved in their organisation’s pandemic communications response. 23% are playing a significant role in setting up and/or rolling out the recovery plan.

• The vast majority of respondents (90%) felt their organisations were either well or somewhat prepared to deal with the pandemic. Principle risk management tools were business continuity plans (74%) and unspecified preventive measures (59%).

• For 31% of respondents, a pandemic was part of their organisation’s risk register in September of 2019.

• 67% said insurance, especially for non-damage business interruption, had not fulfilled corporate needs. Approximately 60% would be interested in an NDBI insurance product for pandemic or other catastrophic events.

• The demand for risk management will grow as a result of the pandemic (75%).


Based on the responses, FERMA offers the following comments for policy makers:

• We need to build capacity to build resilience. We wish to see the EU encourage corporate risk and insurance managers to play a key role in promoting risk awareness for example, with their suppliers, which are often SMEs. Public authorities could support the development of a BCM culture within organisations.

• On the financial side, the EU should help to create a public-private financial solution for NDBI for pandemic and other major catastrophic risks, based on insurance and built on a sound foundation of risk management.

• The EU should communicate and coordinate initiatives across Member States.


FERMA’s report was based on a survey carried out among its 22 member associations between 28th September and 21st October 2020. Replies were received from 314 respondents in 21 countries.

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