New Delhi, Jul 18 (PTI) Industry body CII on Sunday made a case for setting up a 'Pandemic Pool' with initial financial support from the government as a long-term risk management solution to deal with COVID-19-like situations in future.
Observing that the risk associated with the pandemic is currently top-of-the-mind issue for most individuals and businesses, the Confederation of Indian Industry (CII) said their participation and contribution for premium funding (for pandemic pool) can be appropriately solicited.
The CII further said, 'Even though initially, fiscal support from the central government is required for the successful start of the pool, the government support can gradually reduce to near zero levels, as the pool becomes self-sufficient with accumulated surpluses over a period of 12-15 years.' It said that though the insurance companies have largely been able to withstand the pandemic-related losses till now, the sheer amount of capital required to absorb the loss of future variations of the pandemics could be significantly more than the total capital available with the entire insurance and reinsurance market across the globe.
'This is the opportune time for India to have the first-movers advantage in creation of the pandemic pool with a two-pronged strategy of going beyond the insurers and the government by inviting international reinsurers to supplement capital contribution for the pool and to incentivise state governments to participate with additional supplementary capital for greater protection to their denizens,' it added.
It suggested that to raise at least 5 per cent capacity or pool limit, Pandemic Bonds in the form of risk-linked securities could be considered. To have larger private partnership and to tap capital beyond insurance and reinsurance industry, include contribution or premium paid to the pool as eligible CSR expenditure. And, waiver of GST for the premium collection for the pool can also be considered. PTI RR CS HRS hrs