Cooperation between Munich Re and Metabiota will push risk transfer solutions for epidemic risks

Munich Re has entered into a long-term cooperation agreement with Metabiota, a San Francisco-based company that has pioneered the use of real-time data collection and comprehensive risk analytics for epidemics. The issue of epidemics has always been present in life insurance, but epidemic risks are mostly excluded in property-casualty insurance products. Now, based on the data and analytics provided by Metabiota, Munich Re aims to develop models and insurance solutions in property-casualty insurance designed to mitigate the economic losses caused by epidemics. The solutions will support the recovery of national economies and businesses, enabling individuals to return to normal life.

Munich. Epidemics like Ebola, SARS and MERS pose a serious threat to the health and lives of individuals. But infectious diseases can also severely affect national economies and company balance sheets. For example, South Korea’s hospitality and retail sectors had been most affected by the outbreak of MERS in 2015, with a 40% drop in foreign visitors. It is not difficult to imagine the financial losses suffered by large leisure facilities and hotel operations with a daily turnover of up to USD 8m when an epidemic drastically reduces the number of visitors. Munich Re is in the process of developing new types of property-casualty insurance cover for industries such as hospitality and travel that could be severely affected by an epidemic. This marks another step in Munich Re’s effort to expand the boundaries of insurability. A global pandemic, however, will remain a major challenge for the insurance industry due to the extreme accumulation.  

“Epidemics are not one-off events, but demonstrate distinct patterns similar to natural catastrophes. And just as natural catastrophes can be insured despite the diversity and uniqueness of the events, epidemics are no exception,” said Nathan Wolfe, founder and CEO of Metabiota. “We are capturing unique data on infectious diseases supporting the development of financial mechanisms to limit the economic impact of epidemics.”

Tobias Farny, Chief Executive Asia-Pacific for Greater China, Korea and Southeast Asia at Munich Re: “When it comes to finding solutions, it all starts with data analytics that help us better understand the direct and indirect costs of infectious diseases for various industries. We are working with Metabiota to capture these insights and improve our understanding and quantification of epidemic risk. Eventually, we will be in a position to model the potential financial impact an epidemic may have on a region and its economy and offer the right insurance solutions.”

Munich Re has already made use of Metabiota’s data and real-time monitoring capabilities to structure innovative solutions to transfer epidemic risk to investors in a private placement and has also worked with Metabiota on data analysis for a cover for the infectious disease MERS in Korea.