The impact of the Covid-19 pandemic on the business interruption insurance demand in the United States

Can major public health emergencies increase the participation of commercial insurance? Evidence from China

Background

Public health emergencies have a lasting impact on a country's economic and social development. However, commercial insurance can disperse these negative consequences and reduce risk losses.

Method

Based on the Chinese Household Tracking Survey and Peking University Digital Inclusive Finance Index, this study employed a difference-in-differences model to test the impact of the COVID-19 outbreak on commercial insurance participation and the impact mechanism.

Results

The analysis showed that the outbreak of COVID-19 improved residents' risk perception, risk preference and digital finance and promoted their participation in commercial insurance, commercial endowment insurance, and commercial medical insurance.

Conclusion

Major public health emergencies can increase commercial insurance participation, but the promotional effect of commercial insurance on rural and low-income individuals is relatively limited. To tap into potential customers, financial institutions should focus on vulnerable societal groups. This study supplements the relevant literature on the impact of major public health emergencies on commercial insurance participation.

The possibilities and limits of insurance as governance in insuring pandemics

Insurance can, as has clearly been indicated in the literature, play an important role in dealing with catastrophe risks, not only as a compensation mechanism but also as a mechanism to influence the behaviour of the insured. It is the concept known as 'insurance as governance'. However, we argue that there are limited possibilities for this role as far as the insurance of pandemics is concerned. The traditional technical tools, such as risk-based pricing, are difficult to apply. In addition, there may, ab initio, be serious problems in insuring pandemics within one of the main conditions of insurability (controlling moral hazard through an effective risk differentiation). One remedy that is traditionally applied, more particularly for natural catastrophes, is mandatory coverage. Furthermore, the capacity problem might potentially be solved through a multilayered approach in which, in addition to insurance and reinsurance, the government could also take up a role as reinsurer of last resort. That would also have the major advantage of stimulating market solution (and potentially providing incentives for the mitigation of damages), which clearly fails in a model where the government simply bails out operators. Finally, one important regulatory intervention is that insurers should be better informed than was apparently the case during the last pandemic about exactly which type of risks are covered and which are not.

The Effect of the COVID-19 Pandemic on the Labor Markets of the Visegrad Countries

The COVID-19 pandemic caused a sudden and deep recession contributing, among other things, to a sharp rise in unemployment. The article addresses changes in the labor markets of the Visegrad countries (Czechia, Hungary, Poland, and Slovakia), covering the period 2018–2021. It attempts to answer the questions: how deep a slump was caused by the pandemic in these markets, how flexible forms of employment responded to it, and whether there were discriminatory phenomena (decline in employment and increase in unemployment in the most vulnerable groups in the labor market). The analysis was based on quarterly data published by Eurostat on the size and structure of the employed and unemployed population. The results of the compilations indicate a relatively small deepening of imbalances in the labor markets of the analyzed countries, a differentiated reaction of flexible forms of employment (depending on the form of employment), which was in line with expectations (they were used as a business cycle buffer). In most of the V4 countries, women were relatively less likely to lose their jobs than men during the pandemic. In a few cases, a relatively stronger decline in employment (increase in unemployment) affected young people, people aged 55–64, and people with the lowest education.