Gigantic risks: a Crash could look at not only the taxpayers suffer for it

The world's largest reinsurer, Munich Re is proposing a partnership between the state and insurers for better protection of the financial losses during a pande

Gigantic risks: a Crash could look at not only the taxpayers suffer for it

The world's largest reinsurer, Munich Re is proposing a partnership between the state and insurers for better protection of the financial losses during a pandemic. "The state and the insurance companies could and should agree who is liable for future lock downs, to what extent and how exactly," said CEO Joachim Wenning of the German press Agency.

In the past few months, it has worldwide corona dispute-related cases between companies and their insurers. Before the Munich district court will be negotiated this week, a number of such civil actions against insurance companies.

"The discussion on Corona revolves Essentially around the question of the extent to which lock-down-related interruptions of Operations of property insurance are covered," said Wenning to the discussion. "In some cases, this is not the case in the other. Because of this protection is expensive, he's been with us, but it's also hardly bought.“

the state should only step in when a company has insured

Wennings proposal: "she could offer to look in such a way that the insurance industry agreed at a future Lockdown up to a certain amount of insurance protection", the Manager, since the 2017 at the forefront of the Munich Re. "In return, you will receive an appropriate risk premium. The amount will be exceeded, could fill in the state – but under the condition that the company has self-insured.“

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such A model would provide a healthy incentive structure and a width effect does not achieve that, there is today, said Wenning. "And it would be transparent: Everybody would know what is covered and what is not. In other words: Who vaccinates themselves, will receive the necessary backing from insurance and the state, if it is serious. We supply the vaccine for the economy.“

insurance companies must now stressed for pandemic consequences

he said that the insurance industry will follow, in several respects, for Corona now stand: "the insurance protection applies in many situations: the deaths are covered by life insurance, without distinction, in the case of health insurance it is just the same. The event cancellation insurance, which we feel.“ dpa/Lino Mirgeler/dpabild Joachim Wenning, management Board Chairman of the Münchener rückversicherungs-Gesellschaft (Munich Re).

The iron principle of the Munich reinsurance since the first day was: "Everything that is insured by us and covered, will be paid by us, even if it is a surprise to us and painful."

"it is too great a risk, and does not diversify"

However, for non-insured damage to the industry is not able to stand up to the Wennings assessment: "If one now asks: Could you as the insurance people take the economic costs of a pandemic? Then the clear answer is: no, the risk is much too great and does not diversify.“ Chief financial officer - Live will-Online-conference on 3. August!

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unlike some Economists Wenning is comparatively rapid recovery of the world economy of the Corona pandemic. "Based on the Confidence that there will soon be medical treatment options that are better than today's, and the ability to mass vaccination is available – if not the end of the year, then in the first half of next year," said the chief Executive of the in 1880 founded the group. "If this is not possible, you have to expect that the recovery will take longer. But it is very difficult to predict.“

"We are in the midst of a Japan scenario"

in the long term, Wenning looks rather unpleasant prospects: "By the Covid-19-related economic stimulus programs and by the policy of the Central banks is swept into a money in the markets, we expect low interest rates for a very long time. We should not hope that the interest rates will recover within the next five or ten years,“ said the doctorate degree in Economics. "I believe that we are in a Japan scenario."

Japan is considered by many economists as an example of the failed management of a crisis: the beginning of the 1990s burst of a speculative bubble, the real estate and stock prices to dizzying heights had driven. Subsequently, the country suffered from rates of a number of years with very low growth and low interest rates, the consequences are not overcome completely.

"In zero growth will be the distribution of questions to the Problem,"

The price of low-interest-rate policy, "foreign debt costs nothing," said Wenning. "If debt free, the debt countries and companies. That happens, with no real disadvantages must be taken into account, can these funds in non-productive and not efficient to use.“ The go economies to the detriment of the productivity and growth of people. Order your Ticket now! Germany's largest financial week

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"The size and quality of the cake does not do it well. Long-term growth rates, which adapt to the level of interest rates is threatening then,“ said Wenning. "In the case of zero growth, the distribution of questions to the Problem, because it is no longer possible to let people on welfare growth in part; still less, if Inflation is positive. For the young Generation, the would be an additional heavy burden.“

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Updated Date: 29 July 2020, 07:28

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