From 4 July 2020 onwards, pubs, cafes and restaurants in England will be reopening along with cinemas, theme parks, hotels and camp sites. However, as the restrictions are eased, it’s important that businesses protect themselves against the risk of future waves of COVID-19 or other pandemics.

On 1 July 2020, Lloyd’s, the world’s leading insurance and reinsurance market, published three open source frameworks which insurers and governments could use to protect businesses against these future risks, also known as “black swan” events.


ReStart offers targeted non-damage business interruption coverage for future waves of COVID-19. This is targeted at smaller SMEs and aims to help them reopen against the immediate threat of further interruption caused specifically by any future waves of COVID-19.

In terms of pricing, Lloyd’s suggests that businesses are charged premiums upfront for an annual policy. Insurers can manage risk and ensure the affordability of the product by pooling together to spread the risk between different insurers and assessing different levels of risk for different industries and locations. Notably, there is no requirement for a government backstop.

Recover Re

Recover Re is broader than ReStart, it offers:

  • non-damage business interruption coverage for future waves of COVID-19, where commercial cover is not available;
  • non-damage business interruption cover for future pandemics; and
  • could include cover for other black swan events.

It is an “after the event” insurance product, and could be targeted at specific SME economic segments, such as the worst-affected SME sectors, to help them reopen against the immediate risk of damage caused by future COVID-19 waves and other pandemics.

To manage the risk, insurers can require businesses to enter into multi-year contracts with mandatory premium payments over the full term, or cancellation penalties to ensure insurers’ claims costs are recovered. This would allow insurers to recover upfront claims costs over the length of the policy term (circa 10-15 years) and ensure the product is affordable for customers. Governments may be required to guarantee policyholders’ future premiums to mitigate the risk of them defaulting on payments.

Black Swan Re

Black Swan Re provides the broadest coverage of the three frameworks. It offers government-backed reinsurance of non-damage business interruption cover for future black swan events, where commercial cover is not available. This would include cover for future pandemics as well as other future events that could spark a major collapse in a specific industry or the broader economy. In addition, it could also cover secondary impacts of future events, such as supply chain disruption.

Insurers would manage the risk by using industry-pooled capital to reinsure insurers offering primary cover for future systemic events. It would be backed by a government guarantee should the pooled assets become exhausted, meaning the full risk costs may not be passed to customers.   

Lloyd’s says these frameworks will take time to develop: ReStart will take two to three months; Recover Re will take three to six months; while Black Swan Re will take six to 12 months.


If implemented, these three frameworks could provide business owners with financial protection against further waves of COVID-19 and other future pandemics, as well as strengthening resilience against future catastrophic black swan events. 

The frameworks, taken together, are intended to fill the pandemic-shaped “gaps” in commercial cover available to businesses. They show that the insurance industry is taking a proactive approach to change and is responding to criticisms such as the deterioration in attitudes to insurance as a result of business interruption policies often not responding as expected during the COVID-19 crisis. That said, it remains to be seen how insurers and governments will engage with the frameworks. Watch this space.

Written by Ted Powell and Stephanie Reeves - Commercial Dispute Resolution team at Irwin Mitchell