Munich Re will step up the use of data analytics to design property and casualty covers for economic losses from epidemics such as the Middle East respiratory syndrome (MERS) outbreak.

The move is part of the global reinsurer’s plan to expand its product lines to include industries such as hospitality and travel, which are especially vulnerable when epidemics occur.

It has entered a long-term co-operation agreement with Metabiota, a US company that specialises in real-time data collection and risk analytics for epidemics.

The pair worked together last year when the reinsurer designed an insurance solution for the Middle East respiratory syndrome (MERS) outbreak in South Korea.

“When it comes to finding solutions, it all starts with data analytics that help us better understand the direct and indirect costs of infectious diseases for various industries,” Munich Re CEO Asia-Pacific for Greater China, Korea and Southeast Asia Tobias Farny said.

“We are working with Metabiota to capture these insights and improve our understanding and quantification of epidemic risk.

“Eventually, we will be in a position to model the potential financial impact an epidemic may have on a region and its economy and offer the right insurance solutions.”

Munich Re says its risk solution for the MERS outbreak was a success in South Korea, where tourism-related sectors suffered from sharp drops in visitor arrivals.

At the height of the epidemic, the South Korean Government announced moves to insure international travellers against infection and death, with cover of $US5000 ($6945) for anyone infected and $US100,000 ($139,000) in the case of death.

“The cover helped to restore trust in the response of the… Government to any further spread,” Munich Re CFO Jorg Schneider told insuranceNEWS.com.au.

“Also, within three months, the economy recovered almost 100% of its [previous] performance.”