Can a vaccine insurance pool inoculate manufacturers and patients?
The makers of Covid-19 vaccines – foreign (Pfizer and Moderna) and India (Serum Institute of India) – are asking the Indian government to “inoculate” them against liability lawsuits because of the adverse effects of their vaccine on several people.
Simply put, an insurance pool is an arrangement between insurers to underwrite a particular business together, as this individually involves enormous financial risk.
Claims, if any, are to be paid from the pooled money / premium.
“An insurance or reinsurance pool is a constraint for: (a) The financial capacity required to support the insurance / reinsurance offer is too large for individual companies or sometimes even national or international markets cannot n it is not financially prudent to do it alone. For example, nuclear risk and the nuclear liability pool, ”R. Raghavan, former managing director of the General Insurance Corporation of India and founder and CEO of the Insurance Information Bureau, told IANS.
Continuing further, he said that a pool is formed when estimating risk exposure is either too complicated due to technological dimensions or if the extent of diversity of risk occurrence is large or frequent. , preventing risk management for risk elimination or avoidance. Examples are space risks, natural disasters, terrorism.
The third reason for a pool would be that the per capita risk can be modest but, cumulatively, can put any individual insurer at risk, for example motor vehicle liability, Raghavan said.
A senior official at a government-owned non-life insurer, preferring anonymity, told IANS: “Without the support of international reinsurance, Indian insurers will not have an appetite for such risks.
“The decision of insurers to embark on this proposal is left to their prudence. The pool only exists if all insurers want to take the plunge,” KK Srinivasan, former member of the Indian Authority, told IANS. Insurance Regulation and Development (IRDAI).
An industry expert told IANS on condition of anonymity that vaccine makers fear class action lawsuits that could result in huge claims payouts for adverse reactions to their product.
He said the pool could be formed with local capacity or with support from reinsurance.
“A pool cannot have unlimited liability. Its liability must be capped. A Covid-19 vaccine pool will be short lived and may not be viable. In the case of a short-term pool, after a specified period, the corpus is returned to the contributors. On the other hand, if we bring all the vaccines into the pool, it could be long term and sustainable, ”he added.
According to another senior official governing the insurance sector, the Covid-19 vaccine is still in “work in progress” mode, which means that its risk has not played out.
“A pool comes into play when the risk is played. For now, the Covid-19 vaccine is an ongoing risk for many countries. Perhaps in three / four months, some patterns could emerge on the cover. ‘insurance and the pool,’ he added. official preferring anonymity says IANS.
While issues such as jurisdiction are clearly limited to India, the government can look to the model of Prime Minister Fazal Bhima Yojana. Create the desired capacity with the active and competitive participation of insurers and reinsurers. Rely on internationally agreed limits of liability, Raghavan said.
“By stretching that, one can even invite participation in capital markets through the issuance of indemnification bonds, which can be liquidated by Indian courts, served by decent interest rates so far,” a- he added.
Regardless, it’s also unclear whether vaccine makers will lower their price if they are granted such immunity, as the price also takes into account insurance, litigation risk, and compensation.
(Venkatachari Jagannathan can be contacted at [email protected])
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