It is currently in its early stage to help citizens and migrants facing loss of income. The IRDAI report notes that the actual size of the pool will depend on the risk covered and the estimated potential losses.
The group recommended the establishment of an Indian Pandemic Risk Pool to address losses and unrest caused to members of unofficial organizations and low-income communities and serve as a vehicle of government assistance to these sectors in the event of any such pandemic or epidemic event.
While experts say the cost of business outages caused by the COVID-19 pandemic will be huge and unprecedented, this estimate can hardly be used as a basis for building insurance pools and support.
In the first phase of the pandemic pool creation, priority will be given to losses due to business interruptions, primarily due to wages in the MSME sector and migrant workers.
It will take approximately 20-25 years to increase the size of the pool so it becomes self-sufficient, according to the IRDAI report.
Government support is only activated when certain pandemic conditions are met and pool payments exceed premiums collected, the capacity offered by insurers and reinsurers, and the capacity offered by other bonds and surpluses from previous years.
In July, IRDAI formed a working group to explore the possibility of creating a pandemic risk pool to tackle the risks associated with economic disruption following the outbreak of health emergencies like the coronavirus.
Photos are from open sources.