Life Insurers need to hold more capital to manage the risk of a potential bird flu pandemic, a catastrophe risk management firm has warned.
The chance of a man-made pandemic of bird flu has risen with researchers attempting to increase the virulence of the virus after a year-long research ban.
Researchers controversially aiming to develop a more virulent strain of the H5N1 avian influenza, to create vaccines and treatments in preparation for potential pandemic.
According to analysis from RMS, global catastrophe risk management firm that provides risk management services to insurers and reinsurers, while probability of a pandemic remains low, insurance companies should ensure they have enough capital to manage the risk.
Dr. Maura Sullivan, senior director of LifeRisks at RMS, said: "Laboratory experimentation remains controversial because of the possibility of creating a super flu that might not have occurred naturally.
"The H5N1 influenza virus is highly virulent and rapidly mutating, and its evolution, through either natural or laboratory means, could pose the most significant pandemic threat of the modern era," commented."
Dr. Andrew Coburn, senior vice president of LifeRisks at RMS, said if the research resulted in good vaccines pandemic risk would reduce by 30% but with the risk of pathogens escaping from the resrach lab, it urged insurers to reserve an additional 5% in capital to compensate for a potential super flu scenario.
Dr Sullivan at RMS, said: "We need to ensure an appropriate level of laboratory safety to balance the increased risk with the public health benefit.
"The research community alone should not be solely responsible for regulating practices that could significantly increase infectious disease mortality risk for all. Even a mild epidemic with limited mortality can have catastrophic economic impacts."
RMS has published a whitepaper on ‘The Contribution of Laboratory Pathogens to Excess Mortality Risk' on its website.
The bird flu virus has infected more than 600 people globally - typically through direct contact with an infected bird - and has killed 60% of those infected.
Transmissible viruses produced in the laboratory are not yet as deadly as avian flu in the wild, but the new round of research is aimed at achieving this, RMS has reported.
RMS specialises in quantifying extreme risk for the insurance and financial services industries.
