Pandemic scenerios underestimate severity

In response to increasing concerns of a flu pandemic, Risk Management Solutions (RMS) has completed a probabilistic model for assessing the risk of influenza pandemics across multiple countries.
While there are currently a number of other studies illustrating effects of various pandemic scenarios, most base their models on the 1918 influenza pandemic. Recent analysis indicates the 1918 outbreak does not exemplify the most severe potential pandemic. RMS reports that companies may be underestimating their risk if they assume that the 1918 pandemic is the worst-case scenario.
Probabilistic estimation of the characteristics of the most recent flu strain, the “avian flu” H5N1, indicates that this virus has a one in five chance of inciting a pandemic more severe than the pandemic of 1918.
H5N1 has viral characteristics that RMS reports will increase the likelihood of a virulent pandemic if it provides genetic material for human-to-human influenza transmission.
The “RMS Influenza Pandemic Risk Model” will help insurers assess the losses they may potentially experience in the occurrence of pandemics with an array of different permutations of potential characteristics and outcomes.
Effective risk management requires quantification of not only the severity of an event, but also the likelihood of the evet occurringindicates that it is possible even more severe pandemics will occur. Taking this into account, the RMS model incorporates over 1,800 pandemic influenza scenarios. This approach considers factors including likelihood of the pandemic occurring, infection and lethality of the pandemic, demographic impact, country of outbreak, vaccine production, and national countermeasures.
Dr. Andrew Coburn, RMS project lead on influenza pandemic risk modeling, says influenza pandemics can last two to three years. This, he says, “makes it essential for insurers to put in place a multi-year risk management strategy that considers the reinsurance crunch that will likely occur in the event of a pandemic.”