How governments and financial services can work together more effectively?

Oliver Wyman (OW) provides several recommendations in this report on how governments and financial institutions can work together more effectively, to tackle this crisis and help speed the economic recovery.

In summary these recommendations fall into the following categories: 

• “Course-correct on credit provision to small and midsized businesses. When necessary, authorities must simplify existing measures or extend their scope to address blind spots”
• “Prepare to manage a potentially large corporate solvency crisis that will arise after the initial liquidity support”.
• “Planning loss absorption for future outbreaks: a better-designed sharing of loss absorption between government, business, investors, banks, and insurers is required. The urgent priority today is to put in place a systemic solution to pandemic re-insurance”. In this regard, OW´s proposal is similar to the insurance mechanisms already in place in many countries to cover flood and terrorism risks.

According to OW “in an advanced economy, the cost of providing blanket business interruption insurance in the current episode could have been more than 3% of GDP and 60 times greater than the average annual claims for natural catastrophes”.