Mobilising insurance expertise to combat Covid-19 economic consequences
Birkbeck’s Dr Konstantinos Chalkias is part of the team awarded a UKRI grant for a new project to support post-pandemic recovery.
A joint project between Birkbeck’s Department of Management and the Cass Business School has been awarded a prestigious Covid-19 grant from the Economic and Social Research Council (ESRC), part of UK Research and Innovation (UKRI), for a new project which will support the UK’s economic response and recovery from the pandemic.
Birkbeck’s Dr Konstantinos Chalkias is working alongside principal investigator Professor Paula Jarzabkowski (Cass) to conduct the study, entitled ‘Risk sharing mechanisms to mitigate the economic consequences of pandemics: mobilising insurance expertise & capital to provide solutions for the UK’. The project involves collaboration with industry partners, including the Association of British Insurers; the Government Actuary’s Department; Flood Re; Pool Re, and the Confederation of Business and Industry.
The pandemic is causing business interruption (BI) across UK businesses, resulting in unprecedented widespread and global economic losses that are too large to be absorbed in full by the insurance industry. Yet, businesses are unlikely to be able to continue trading without access to adequate BI insurance. As the government steps in to protect businesses, the burden for taxpayers is rising exponentially. This study will consider novel solutions for risk-sharing mechanisms to effectively share pandemic BI risk between UK businesses, insurers and government.
Researchers from Birkbeck and Cass Business School will work with industry partners to develop a BI risk-sharing mechanism, evaluate and build upon current post-lockdown products being generated by insurers, and develop new solutions with this full range of stakeholders. This will enable delivery of a sustainable longer-term governance and funding solution for supporting UK business against interruption from current and future pandemics.
The project will release interim outcomes and make its final recommendations in August 2021.
Dr Konstantinos Chalkias said: “During these unprecedented times, the government stepped in to provide emergency support for workers and businesses. This is a clear example of government acting as an ‘insurer of last resort’, by paying for costs that cannot be covered by the private sector alone.
“While government action is vital, taxpayers are exposed to an ever-increasing financial burden. Our study will identify risk-sharing solutions to effectively share the risk between UK government, insurers and businesses. Collaboration is crucial as the pandemic risk is rather large-scale and concurrent in nature to be adequately covered by one of these stakeholders alone.”
Dr Geoff Walters, Executive Dean of Birkbeck’s School of Business, Economics and Informatics, said: “It is encouraging to see that this vital work has been recognised by the ESRC. Collaboration between universities and the private sector will be key to resolving economic challenges in light of Covid-19 and I am delighted that Dr Chalkias will be among those offering solutions to problems we may encounter through the UK’s economic recovery.”