Posted on Apr 10, 2020
Litigation Builds Against Insurers Over Coronavirus Business Interruption
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Insurance companies recognize the danger and likelihood of a Pandemic, that they refuse to cover business interruptions due to COVID-19.
Most interesting quote:
“They wouldn’t offer some of these contracts if they were required to cover pandemics,” said Benjamin Collier, an assistant professor in the risk, insurance and healthcare management department at Temple University’s Fox School of Business. “They wouldn’t offer business interruption insurance at all, or in cases where they might be willing to, they would charge substantially different rates.”
Most interesting quote:
“They wouldn’t offer some of these contracts if they were required to cover pandemics,” said Benjamin Collier, an assistant professor in the risk, insurance and healthcare management department at Temple University’s Fox School of Business. “They wouldn’t offer business interruption insurance at all, or in cases where they might be willing to, they would charge substantially different rates.”
Litigation Builds Against Insurers Over Coronavirus Business Interruption
Posted from insurancejournal.com
Insurance
Coronavirus COVID19
Business
Government
Posted >1 y ago
Responses: 4
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This is a complex issue, but for simplicity's sake, I'll break it down Barney style:
1. Insurers have specific language in the policy that excludes virus outbreaks.
2. Insurers have specific language that includes government orders for a business interruption.
3. Insurers will become insolvent if they actually paid this out.
That means a binary choice -
1. Business owners go to court and lose and seek a government bailout, which is already occurring
2. Business owners go to court and win and insurers go bankrupt trying to pay claims (more likely, appealing the decision) and seek a government bailout.
In the end, we will all pay, one way or the other. So let's cut the middle man and all the time it will take to adjudicate this and address it with legislation.
1. Insurers have specific language in the policy that excludes virus outbreaks.
2. Insurers have specific language that includes government orders for a business interruption.
3. Insurers will become insolvent if they actually paid this out.
That means a binary choice -
1. Business owners go to court and lose and seek a government bailout, which is already occurring
2. Business owners go to court and win and insurers go bankrupt trying to pay claims (more likely, appealing the decision) and seek a government bailout.
In the end, we will all pay, one way or the other. So let's cut the middle man and all the time it will take to adjudicate this and address it with legislation.
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SCPO Jason McLaughlin
I agree, I am not suggesting that insurance companies should be on the hook to pay for something specifically not covered in their policies. I just wanted to highlight that companies that are experts in monetizing risk find that the risk of insuring against a pandemic is too high.
From an analysis perspective, I believe that the above fact indicates the US Government (branches and levels) should take that as an indicator that the threat posed by a pandemic is greater than that of say, natural disaster (earthquake, flood, weather). It may help in focus the preparation in the future.
From an analysis perspective, I believe that the above fact indicates the US Government (branches and levels) should take that as an indicator that the threat posed by a pandemic is greater than that of say, natural disaster (earthquake, flood, weather). It may help in focus the preparation in the future.
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