Boston-based catastrophe risk modelling firm AIR Worldwide announced on Monday that it has expanded its global pandemic model to include outbreaks of six additional diseases.
The model now explicitly accounts for nine pathogens, including bacterial and viral diseases, in addition to previously modelled influenza, coronaviruses (such as those responsible for SARS and MERS), and filoviruses (including Ebola and Marburg).
AIR Worldwide, a Verisk Analytics business, also announced that the World Bank Group has selected the company to model the new Pandemic Emergency Financing Facility (PEF), announced in May. The PEF is “an innovative, fast-disbursing global financing mechanism designed to protect the world against deadly pandemics, which will create the first-ever insurance market for pandemic risk,” the World Bank said at the time.
The AIR Global Pandemic Model update includes the addition of two pathogens from the Bunyaviridae viral family [Rift Valley fever virus and Crimean-Congo hemorrhagic fever virus, Lassa (hemorrhagic) fever from the Arenaviridae viral family, and bacterial-pathogens-associated cholera (Vibrio cholera), plague (Yersinia pestis), and meningococcal meningitis (Neisseria meningitidis). All simulated outbreaks in the AIR model can originate anywhere in the world, and AIR models the impact to 24,000 municipalities covering all corners of the world, the firm said in a press release.
Regarding the collaboration with the World Bank, the release noted that the PEF includes an insurance window, which combines funding from the reinsurance and/or insurance-linked securities markets, as well as a complementary cash window. “This is expected to be the first time the World Bank issues a financial instrument to combat infectious diseases,” the release pointed out, adding that according to the World Bank, in the event of an outbreak, the PEF is expected to release funds quickly to countries and qualified international responding agencies.
“The analytic structure and modelling are the bedrock of risk-transfer programs like the PEF,” said Priya Basu, manager of development finance with the World Bank. “We’re confident that AIR Worldwide’s analytical and execution capabilities can help ensure that funds mobilized by the PEF are able to help prevent rare, high-severity outbreaks from becoming more deadly and costly pandemics.”
Doug Fullam, associate of the Society of Actuaries and a senior manager of life and health modelling at AIR Worldwide, said that modelling plays a crucial role in developing a facility such as the PEF. “Emerging infectious diseases pose some of the biggest threats to the life and health of people around the globe, and AIR models can help organizations anticipate the drivers of mortality and morbidity risk to facilitate optimal risk management, risk transfer and risk mitigation decisions to help them better prepare financially and, more important, on a humanitarian level,” he said.
Furthermore, large-scale infectious disease pandemics can cause millions of deaths and billions – or even trillions – of dollars in economic and insured losses, Fullam said. “The possible frequency and scale of these perils are shifting as global connectivity grows, animal habitats alter, medical advancements continue, the population ages, and the climate changes.”
Recent economic analysis suggests that the annual global cost of moderately severe to severe pandemics is roughly US$570 billion, or 0.7% of global gross domestic product (GDP), the World Bank said in May. A very severe pandemic like the 1918 Spanish flu could cost as much as 5% of global GDP, or nearly US$4 trillion.
AIR Worldwide’s Global Pandemic Model is currently available in the CATRADER Version 18 catastrophe risk management software.