The crises behind the health crisis

By Alban de Mailly Nesle, AXA Group Chief Risk & Investment Officer

Alban de Mailly Nesle

Group Chief Risk & Investment Officer, AXA

The COVID-19 pandemic is an economic crisis, just as much it is a health crisis. We had pandemics in the fifties and sixties, but we’ve never locked down our economies like this before. In my view, that is what makes this crisis unprecedented. As an insurer, we are able to model pandemics. Going into this crisis, we had extreme scenarios that were worse than COVID-19, at least for now, in terms of infection rates and mortality. What we could not model was the lockdown – and the devastating effect it has had on our economies. To some extent, we are fortunate in that we can at least see an end to this crisis. That was not the case ten years ago with the financial crisis. At that time, we watched as one bank failed after another. We had no idea – we could have no idea – when the crisis would be over. This time, we know that the crisis is due to our own lockdown measures.

“As an insurer, we are able to model pandemics...What we could not model was the lockdown – and the devastating effect it has had on our economies.”

We are also fortunate that we went into this crisis with high levels of employment. Had COVID-19 struck in 2008-2009, shortly after the financial crisis, the damage would have been far greater. Rightly, we put a much higher value on human life than we did even a few years ago. To save lives, we were willing to shut down our economies at a huge cost. In France alone, we estimate the cost of closing businesses amounts to around EUR 40 billion a month. To my mind, there is no doubt this pandemic will also raise deeper, more structural questions. Governments were very quick to support our economies – they have guaranteed loans, reduced interest rates and sought to protect millions of jobs. I’m not sure, in the circumstances, that governments could have done more. As a result, we are beginning to re-think the role of government in our economies. Over the past thirty or forty years, we have seen a reduction in the State’s role. Now, we’re starting to think that should change – that, actually, the State could play a similar role with other challenges. If governments can help us tackle a global pandemic like COVID-19, why not climate change, for example? Encouragingly, some governments are already adopting this line. In the wake of this pandemic, they are pressing for a green economic recovery.

It is also evident that socio-economic inequalities have worsened – this is another area thrown into the spotlight by this crisis. We thought economic growth would take everyone out of poverty. It has done so, successfully, in China. But we have to recognize that this is not the case everywhere. Generally speaking, the poorer segments in our society have not benefited as much from economic expansion. The gap between rich and poor is getting wider. In business, as a result, we’re already seeing more focus on social issues; in many countries, people – with some justification – expect business to do more than just make money. Companies and investors are beginning to say: “we want to be part of the recovery from this pandemic, not only because it makes sense economically, but because it’s our duty in society to contribute.” As a rule, crises increase inequalities – the same, I am sure, will be true of COVID-19. Even before the pandemic, we had movements like the Yellow Jackets in France. In the US, Black Lives Matter is a social movement as much as it is a racial one. To some extent, these issues were hidden prior to the crisis. With COVID-19, they will come to the fore again.


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