Airlines will represent the first step toward ensuring inoculations make their way around the world.
As research continues to vaccinate the world against COVID-19, companies are getting closer to finding a potential candidate and vaccine insurance will need to cover various stages of transportation, often starting with the aviation industry.
The insurance industry is gearing up for the time when the aviation industry will require coverage.
That said, vaccine insurance will require the industry to identify and understand the unique risks that may be created as a result of what will likely become one of the broadest logistical operations that has ever been undertaken.
Recent International Air Transport Association data indicates that the billions of doses of the vaccinations that will be required to inoculate the population of the world will require the equivalent to 8,000 Boeing 747 planes. A recently published law360.com analysis indicated that under the Montreal Convention – which outlines the liability a carrier has for international carriage – cargo damage is limited to 22 special drawing rights. That equates to about $30 per kilogram.
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The issue in this case is that while vaccinations are generally extremely lightweight, they are also high in value. Therefore, their weight in a plane wouldn’t provide adequate coverage per kilogram exclusively based on the carrier’s liability.
As a result, additional vaccination insurance may become an important coverage in this exercise.
Under the Montreal Convention, a shipment of vaccines may have an extremely high value, but the carrier liability is substantially lower in monetary terms. In this circumstance, it works in the insurer’s and carrier’s benefit. Despite the fact that COVID-19 vaccination pricing has yet to be determined, some of the most recent estimates indicate that applicable liability limits for a shipment of vaccinations is likely to be substantially lower than the actual value of the shipment.
“While some governments are likely to step in to underwrite the risks inherent in carrying the vaccine, many governments — whose budgets are already stretched due to COVID-19 bailouts — may not be able to extend this luxury to the airline community. It is also likely that certain private entities and companies will purchase the vaccine in order to vaccinate their employees prior to the rest of the general population, and will not, therefore, be provided with any form of government support or security,” said the International Air Transport Association vaccine insurance analysis.