FFA proposes CATEX system
In the context of the pandemic and the colossal pressure and confusion created among governments and insurers, the French Insurance Federation (FFA)has presented the conclusions of its work on a new system for protecting businesses against the economic consequences of a major event like Covid-19. This system is the result of setting up a working group to suggest ideas for the scheme in the end of April.
The “exceptional disaster” (CATEX) system proposed by insurers would aim to be simple, swift and on a lump sum basis to help insured businesses to make it through cessations or significant reductions in activity associated with an exceptional event such as a pandemic, the aftermath of a terrorist attack, riots or a natural disaster. It could be triggered after a declaration by the State of administrative closure affecting a number of businesses for a specific period and over a particular geographic area, according to a statement.
All VSEs and SMEs (2.9 million in total) affected by such closure would be eligible for this system. It would be included either in policies that include Fire cover – which 100 percent of VSEs and SMEs currently have -, or in policies that include Business Interruption cover – which 50 percent of the businesses currently have.
Indemnity would be on a lump sum basis and paid without any prior loss assessment, in the form of resilience capital and it would be intended to indemnify the businesses’gross business interruption, excluding payroll and profit at pro rata of the period of closure.
The businesses benefiting from it would be those directly affected by an obligation to close, but also, in the event of a pandemic, those “ricochet victims”whose activity would have been significantly slowed down.
The CATEX system would be funded by a premium paid by the relevant businesses, and via a public–private partnership which would be based on both the natural disaster scheme and the GAREAT (Management of the Insurance and Reinsurance of the Risks of Terrorist Attacks and Terrorism) tool.
Private insurers and reinsurers are ready to commit EUR2 billion of annual indemnity capacity to such insurance cover, above which the State would take over through the CCR, the public reinsurer.
