Philippe Donnet said that insurers must make changes to create more protection.
The European insurance industry is not equipped with the necessary capacity to handle the systemic pandemic risk, said Philippe Donnet, Generali insurance company CEO.
The Italian insurer’s chief says that considerable additional protection must be implemented.
According to Donnet, in order to equip the insurance industry with what it needs to manage systemic pandemic risk, additional protection must come in the form of private-public partnerships. The Generali CEO made this statement during an online Politico interview cited by Businessinsurance.com.
According to Donnet, the COVID-19 crisis provided Europe’s insurance industry with an important opportunity to build stronger protection for both consumers and businesses.
“When the risk becomes systemic it is no longer insurable and obviously we need to use public money,” said Donnet in the interview. He added that the European Union as a whole, as well as its individual member states, should work with both the insurance and reinsurance industries in order to establish enhanced protection throughout the bloc.
Donnet said that as the insurance industry currently stands, the systemic pandemic risk is too great.
He explained that the COVID-19 pandemic was a chance to see the weaknesses in the current insurance and reinsurance industries so that strengthening measures could be identified and implemented. In Donnet’s opinion, this involves the EU and member states making public-private partnerships in the insurance and reinsurance industries in order to solidify them.
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“Putting all these four layers together we could build a stronger protection system for people and small and medium companies to face the next pandemic, if it happens,” said Donnet in the interview.
When the Generali CEO was asked to comment on Solvency II capital regulations, he explained that transparency and fairness must be maintained. He went on to point out that any system review would need to be done with the purpose of promoting sustainable recovery.
Donnet’s proposed solution to the challenges he identified involved the creation of a special asset class for green bonds, providing them with better capital charges treatment.
“That would push long term investors like insurance companies to invest more in green bonds,” said Donnet in the systemic pandemic risk interview.
