Category Archives: Business Risk

Business Insurance, Business Risk, Legal Environment, Regulation, Workers Compensation

Legislatures AdvanceCOVID-19-related Bills

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As states struggle to identify the best ways to reopen their economies, agencies, and schools from the coronavirus-related lockdown, legislatures have been moving forward legislation to protect them and the people they employ.

Virginia Approves Worker Health & Safety Standard

The Virginia Occupational Safety and Health (VOSH) – the state’s version of the federal Occupational Safety and Health Administration (OSHA) – will enforce a standard that mandates and, in some instances, exceeds guidance issued by the U.S. Centers for Disease Control and Prevention (CDC) and OSHA, PropertyCasualty360.com reports.

The standard protects employees who raise reasonable concerns about infection control to print, online, social, or other media. It covers most private employers in Virginia, as well as all state and local employees.

The standard also requires building and facility owners to report positive COVID-19 tests to employer tenants. It exempts private and public institutions of higher education with reopening plans certified by the State Council of Higher Education in Virginia (SCHEV) and public-school divisions that submit reopening plans to the Virginia Department of Education. No such exemptions are provided to private elementary and secondary schools.

In addition to CDC and OSHA guidelines, the standard requires employers to:

  • Provide flexible sick-leave policies, telework, and staggered shifts when feasible;
  • Provide handwashing stations and hand sanitizer when feasible;
  • Assess risk levels of employers and suppliers before entry;
  • Notify the Virginia Department of Health of positive COVID-19 tests;
  • Notify VOSH of three or more positive COVID-19 tests within a two-week period;
  • Assess hazard levels of all job tasks;
  • Provide COVID-19 training of all employees within 30 days (except for low-hazard places of employment);
  • Prepare infectious disease preparedness and response plans within 60 days;
  • Post or present agency-prepared COVID-19 information to all employees; and
  • Maintain air handling systems in accordance with manufacturers’ instructions and the American National Standards Institute (ANSI) and American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standards.

Special Legislative Session for Tennessee Liability Bill

Weeks after Tennessee’s two legislative chambers failed to come to an agreement on legislation surrounding civil liability for coronavirus, Gov. Bill Lee called the state’s General Assembly to return next week for a special session, The Tennessean reports.

Lee issued an order asking members of the legislature to return to Nashville at 4 p.m. on Aug. 10 to take up the matter, which would extend broad immunity to businesses, schools, and other entities against COVID-19-related lawsuits.

The General Assembly also is expected to take up two other bills it failed to pass before adjourning in June. One would expand medical professionals’ ability to offer telehealth services and encourage insurers to cover those costs. The other would increase penalties for protesters camping and engaging in vandalism at the Capitol. A group of protesters has remained across the street from the Capitol for more than 50 days, resulting in the arrest of some for trespassing and writing messages in chalk.

Nevada Senators Advance Liability Shield Measure

State senators in Nevada, by an overwhelming majority, advanced legislation that would extend COVID-19 liability protections to businesses, nonprofits, schools, and governmental agencies and outlining several measures intended to protect hospitality workers, The Las Vegas Sun reports.

The legislation would extend COVID-19 liability protections to many entities that have “substantially complied with controlling health standards.” Provisions of the bill would sunset either upon the termination of the current state of emergency or in July 2023.

The measure wouldn’t extend to most private health care providers.

“Unease with the bill’s focus on the tourism and gaming industry crossed party lines,” the Sun writes. “Sen. Marcia Washington, D-North Las Vegas, said she was concerned why the bill singled out hospitality workers: ‘I’m here to represent, as far as I’m concerned, everybody, all the workers in the state of Nevada,’ Washington said.”

Marie Neisess, president of the Clark County Education Association, said the bill did nothing to help teachers going back into the classroom this year.

“Even with the best safety measures in place, educators and students will still be at risk,” Neisses said. Putting a bill in place that protects the employer rather than the employee is unacceptable.”

The bill now advances to the Senate floor for final action as lawmakers continue to meet in special session.

“Rebuttable Presumption” for Essential Workers Goes to N.J. Governor

New Jersey may become the next state to enact a law presuming that essential workers who acquire COVID-19 did so on the job, Business Insurance reports.

Lawmakers in the New Jersey Assembly and Senate on Thursday passed S.B. 2380 with a 42-27 vote in the Assembly and a 27-12 vote in the Senate. The bill, introduced in early May, would create a rebuttable presumption for essential workers seeking workers compensation for acquiring COVID-19 on the job during a declared state of emergency.

The bill identifies essential employees as those whose duties are considered essential during an emergency response and recovery operation; public or private sector employees whose duties are essential to the public’s health, safety, and welfare; emergency responders and workers at health-care facilities and those performing jobs that support a health-care facility, such as laundry, research, and hospital food service.

The bill moves to Gov. Phil Murphy’s desk. If signed into law, the legislation would take effect immediately and be retroactive to March 9. According to Business Insurance, a spokeswoman for Gov. Murphy declined to comment on whether he intended to sign the legislation.

Business Insurance, Business Risk

COVID-19 and Shipping Risk

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The shipping industry has largely proved resilient to the coronavirus outbreak, and insurance claims related to risks of the sea could be reduced as fewer vessels venture out, insurer Allianz reports in its Safety and Shipping Review 2020. 

However, new challenges have emerged that could lead to more claims. 

“One of the biggest issues,” Allianz reports, “has been the inability to change crews easily because of pandemic restrictions.” 

Crew relief is essential to ensuring the safety and health of seafarers. Fatigued crew members make errors that Allianz says contribute to 75 percent to 96 percent of marine incidents. Damaged goods and containers account for more than one in five shipping claims. 

“The pandemic has heightened the risk environment around high-value and temperature-sensitive goods in particular as supply chains have come under pressure, cargo-handling companies have shut down abruptly, and ports operated under restrictions,” Allianz says. 

COVID-19 also has made it hard to obtain parts and materials like lubricants that are essential to maintenance and repair. This could make ships and the equipment on board them less safe, potentially leading to groundings or collisions. 

Such an outcome could impede or reverse the industry’s steadily improving safety record.  

The number of total losses of large ships fell in 2019 to 41, Allianz reported – “the lowest total this century and a close to 70% fall over 10 years.” 

The insurer credits improved ship design, technology, regulation, and risk management as contributing to the long-term reduction in losses. 

But improved technology can be a two-edged sword as vessels become more reliant on computers and software, making them vulnerable to cyber incursions. The coronavirus outbreak has affected this risk, too, Allianz says, reporting that companies have faced a 400% increase in attempted cyber-attacks since the pandemic began.  

Business Risk, Disaster Resilience

Safeguard your business from wildfires: Allianz and Triple-I team up on mitigation

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With business owners facing the ‘new normal’ of a seven-month wildfire season, compounded by rising temperatures, public safety power shutoffs, COVID-19 and civil unrest – wildfire preparation will be more critical than ever this year.

As outlined in a new Allianz report “Future Fires: Weathering the Fire Storm”, 2019 was a catastrophic year with 46,786 wildfires burning more than 4.6 million acres, leading to the evacuation of over 200,000 people, sustained blackouts, and the declaration of a state of emergency in California. And this year wildfires are already blazing across drought-ridden Western states while the risk of coronavirus has reduced the number of firefighters available in California and is likely to remain well into the fall.  

To meet the myriad of challenges, Allianz Global Corporate & Specialty (AGCS) has teamed up with the Insurance Information Institute (Triple-I) to provide businesses with some of the most stringent risk mitigation practices for safeguarding their establishments.

According to Allianz and the Triple-I, business owners should take the following steps to safeguard employees and property from wildfire:

1. Create defensible space around your building or structures

2. Create a Vegetation Maintenance Plan (VMP) to reduce sources of ignition

3. Use noncombustible materials for building signage, avoiding wood, plastic, and vinyl

4. Select exterior wall cladding made of noncombustible siding materials such as concrete and brick

5. Select dual-paned windows with tempered glass, kept closed when wildfire threatens

6. Use noncombustible material when replacing roofs. Homes with wood or shingle roofs are at high risk of being destroyed during a wildfire

7. Inspect vents and clear debris from roofs. Roofs and gutters are particularly vulnerable surfaces, as embers can lodge here and start a fire. Regularly clearing your roof and gutters of debris, installing gutter guards or screens, and blocking off any points of entry on your roof will all help safeguard your home 

Finally, don’t forget to update your inventory, business continuity, evacuation, and safety plans.

Business owners should further discuss with their insurance professionals the risks their business’s face as it pertains to wildfire and the need for:

  • Property Insurance (including the differences between replacement vs. cash value)
  • Business Interruption (also known as business income) and extra expense insurance 
  • Mitigation solutions and fire protection services available
  • Precautionary measures that can be taken today to prevent loss tomorrow

“Preparedness is as vital to an organization as business resilience planning,” said Janet Ruiz, Director of Strategic Communications for the Insurance Information Institute. “We recommend business owners review their insurance coverage to ensure they can adequately rebuild their properties as well as protect their business against major disruptions such as wildfire.” 

“Future Fires” highlights how a number of innovative technologies are stepping up to meet the challenge of the prevalence of wildfires and the prolonged duration of the wildfire season. One application of fire protection that is currently in use is an environmentally safe biodegradable fire-fighting foam used for pretreatment and suppression around property and building perimeters. When fire is imminent, foam is applied from private fire trucks appointed with state-of-the-art equipment.

The report also cites a Silicon Valley artificial intelligence company that has developed a system that analyzes satellite images every 10 minutes to identify where new wildfires may have broken out. This technology is trained to spot the likely signs of wildfires, and then alert firefighting agencies, who can verify if indeed a fire has broken out. The company hopes to have the system in place by next year’s wildfire season.

“Allianz is committed to helping businesses mitigate extreme catastrophes like wildfires with the most advanced techniques and solutions available,” says Scott H. Steinmetz, P.E., Regional Head of MidCorp at Allianz Risk Consulting. “The 2020 fire season presents unique challenges and complexities that will inherently put our skills to their utmost test. I feel confident, however, that businesses can greatly minimize their losses with advance planning and close communication with their insurance carrier before, and in the unfortunate event that it occurs, during and after a wildfire.”

Business Risk, Disaster Preparedness, Disaster Resilience, Webinars

Get Your Business Ready for Severe Weather – How to Prepare, Respond & Recover

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A natural disaster will strike no matter where you live in the United States. It’s is not a question of if, but when. But if you’re prepared, the damaging impact of a tornado, flood, earthquake or hurricane can be managed.

A recent webinar conducted jointly by the Small Business Administration (SBA) , the Insurance Information Institute (Triple-I), and the Insurance Institute for Business and Home Safety (IBHS) offered business owners valuable advice on how to plan to withstand a disaster.

Communication is key

Alejandro Contreras, Director of Preparedness, Communication and Coordination at SBA’s Office of Disaster Assistance, advised that communications planning is key to a post-disaster recovery strategy. A list of frequently updated contacts should include local media outlets, utility companies and emergency responders. You should also sign up for alerts from FEMA and local public health officials.

Make sure your records are stored electronically off-site (in the cloud) and make sure you have financial records, insurance policy declaration pages, and important contacts.

When reviewing insurance coverage, don’t forget to explore flood insurance. Flooding is the most common and costly natural disaster in the United States, causing billions in economic losses each year. About 90 percent of all natural disasters in the U.S involve flooding. And just one inch of water can cause up to $25,000 in damage, said Contreras. Flood insurance is sold as a separate policy by the National Flood Insurance Program and a growing number of private companies.

It’s important for a business to create a culture of preparedness and make sure employees understand their roles by frequently testing their business continuity plans, concluded Contreras.

The SBA offers low interest long-term disaster loans to businesses. Since mid-March, the agency has distributed about $86 billion in loans for coronavirus-related losses.  To apply for a loan or to learn about the requirement visit disasterloan.sba.gov.

Get insured

Loretta Worters, Vice President Media Relations, Triple-I, spoke about being financially prepared for disasters with insurance. To be sure the claims process goes smoothly, take a business inventory listing all assets, she advised. It’s also important to have records of expenses and income.

Worters went over the different types of policies available to businesses and what they usually cover. Property insurance helps protect buildings, equipment, furniture, and fixtures. Business interruption insurance (BI) can help with operating expenses during the period of restoration and includes lost net income (based on financial records), mortgage, rent and lease payments, loan payments, taxes, and employee payroll.

A business may have the option to insure its business property at replacement value or actual cash value, she said, noting the difference is that replacement value coverage can help you replace your property at market prices, whereas actual cash value coverage takes depreciation into account. Replacement value coverage costs more, but it also pays out more in the event of a claim so it’s something business should really consider.

BI is also available for civil authority, such as curfews when businesses have to reduce hours due to government orders.

Utilities service endorsement is available to cover disruption in these services to a business premises.

Worters also noted that, as part of BI, extra expense coverage will cover anything beyond the normal day-to-day operating expenses that is necessary to keep a business solvent, such as renting a temporary place of business while your business is insured or leasing equipment.

In response to an attendee’s question, Worters explained that business income losses are determined based on the business’ profit and the cost of continuing normal operations.

Worters concluded that knowing your risks is an essential element of an overall business plan. While large businesses have risk managers to help make insurance decisions, small-business owners must be their own risk manager but can also get help by consulting with an insurance professional.

Make a recovery plan and test it once a year

Gail Moraton, Business Resiliency Manager, IBHS, cautioned that one out of four businesses that close due to a disaster never reopen, yet 57 percent have no disaster recovery plan. Some small businessowners say they don’t have time or money to come up with a business continuity plan or are in denial that a disaster could wipe them out. Easy-to-use plans and checklists are available from DisasterSafety.org.

Moraton also advised that businessowners get familiar with the likelihood and potential severity of the various risks that could threaten their operations. They range from natural disasters to man-made risks, such as cyber attacks, theft, sabotage, war, and loss of key employees, among many others. Owners also should know their operations and gather information by asking staff to list key functions.

She said employees – the most important asset of any business – should be asked to provide their contact information, emergency contacts, and evacuation destinations.

Businesses need to also have a inventory of their equipment and an understanding of their finances.

Moraton said that once you’ve gathered the key information and have a plan you should update and test that plan every year. Running emergency drills annually will make sure everyone is well prepared in case a real disaster strikes.

Know your hazards

Christopher Cioffi, Commercial Line Engineer, IBHS, provided tips on how to review the hazards in your area by checking on previous years’ severe weather events and reviewing FEMA flood maps. He went over the components of the EZ-PREP plan which includes actions to take before, during and after a disaster.

For example, 72 hours before a hurricane, some of the actions the PREP plan calls for include:

  • Remove or secure all debris on the property
  • Review message templates for business’ website, phone recording and employee communications
  • Take laptops home at the end of each day and confirm they can connect to the business’ server from home
Business Risk, Emerging Risks, Insurance Industry

World’s Insurance Markets Hit Hard by COVID-19: Triple-I

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The world’s 10 largest insurance markets are cumulatively expected to see gross domestic product (GDP) decrease by 4.9 percent in 2020 compared to 2019 because of COVID-19, according to a new Insurance Information Institute (Triple-I) report.

“Given the scope of the downturn so far in China, North America, and Western Europe, the virus’s continuing expansion in the Southern Hemisphere, and the possibility of further rebounds in the former this fall and winter, the likelihood of a V-Shaped recovery is extremely low,” writes Dr. Michel Léonard, Vice President & Senior Economist, Triple-I, in the Global Macro and Insurance Outlook: Q2 2020. “The most likely outcome for the rest of 2020 is a slow recovery, with multiple false starts and step backs, that does not stabilize until well into 2021.”

Business Insurance, Business Risk

Bad Faith and Business Income Interruption Policies During the Coronavirus Pandemic

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By Max Dorfman, Research Writer, Insurance Information Institute

A new and risky legal precedent could be set as the coronavirus pandemic continues to roil the U.S. economy. A growing number of policyholders say that insurers are acting in bad faith when they deny claims for losses sustained during shutdowns.

While business income interruption coverage typically covers physical damage to a property, some businesses believe the potential presence of the virus on their property or in their community is equivalent to physical damage.

Business income interruption exclusions for pandemics date back to the 2002-2003 SARS epidemic, when insurers realized that the risk of such a massive health crisis would be impossible to credibly quantify, and thus impossible to absorb.

In several recent articles, some plaintiffs’ attorneys have accused insurers of acting in bad faith by issuing quick denials without properly investigating their claims. “Quite frankly, the prevailing law on the insurance policies is that coverage is supposed to be interpreted broadly and exclusions are supposed to be interpreted narrowly,” said William Shernoff, a founding partner of California-based Shernoff Bidart Echeverria LLP, which specializes in representing policyholders in claims against insurance company denials. Shernoff also stated that any inconsistency in a policy means it’s ambiguous and would result in a decision favoring the plaintiffs.

Michael Menapace, an insurance lawyer and a Triple-I non-resident scholar, disagrees. “They’re trying to recast what the damage is from the policy trigger of “direct physical loss of or damage to property” to a broader concept of “loss of use,” which term does not appear in most policies. They’re also going to claim that somehow the entire insurance industry tricked policyholders by sneaking in the virus exclusion. There is a tension between the plain meaning rule [what the exclusion literally states], and the doctrine of reasonable expectations [the way someone who is not trained in the law would interpret them].” He continued, “When an insurance company denies a claim, they may get the decision wrong – but it doesn’t mean they denied it in bad faith.” Menapace adds that the virus exclusion has not been tested in the courts on any large scale since its adoption in 2006. “There’s so little case law on virus exclusions during pandemics, I have a hard time believing insurers are acting in bad faith.”

There are many reasons for the insurance industry not to act in bad faith under these circumstances. An insurer that is deemed to have acted in bad faith can be liable for damages that are greater than the policy limits, including but not limited to interest, emotional distress, consequential economic losses, attorneys’ fees and punitive damages.

Menapace also makes the point that business income interruption claims from a pandemic would rapidly deplete insurers’ reserves and surplus that are needed for covered losses such as those from hurricanes and other perils. “We can insure certain events because there is a spreading of risk,” saidMenapace. “If everyone has the same loss at the same time, like from a pandemic, we lose the fundamental aspect of insurance, which is risk spreading.”

Much depends on how the courts interpret the exclusions. “Insurers said they were not going to cover damage due to pandemics. There is going to be new law created. It depends whether the courts will read the plain meaning of the exclusion, or if they’ll interpret some of the creative arguments of the plaintiffs.” If these contracts will retroactively favor the insured, Menapace added, it could force insurers to stop covering business income interruption in any scenario, as the costs would simply be too great. And that would be truly bad for policyholders and insurers alike.

Business Insurance, Business Risk

FAQ: Riots and Business Insurance

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Riots across the U.S. and the subsequent damage to thousands of businesses have many business owners asking what their business insurance policies will cover. In this interview, Triple-I Vice President of Media Relations Loretta Worters answers some frequently asked questions about business insurance and what it covers.

Are businesses covered for property damage from riots?

Yes, they are. Business property that has been damaged by riot, civil commotion. vandalism and fire are covered under virtually all businessowners and commercial insurance property policies. This typically includes damage to windows, doors, light fixtures, store windows and plate glass on office fronts. There is also coverage for the contents of the building such as furniture, office supplies, computers or machinery that may be either damaged or stolen.

Should a business insure its building and contents at replacement value or actual cash value?

A business may have the option to insure its business property at replacement value or actual cash value. The difference is that replacement value coverage can help a business replace its property at market prices, whereas actual cash value coverage takes depreciation into account. Replacement value coverage costs more, but it also pays out more in the event of a claim.

What about loss of income?  

Businesses that are forced to suspend operations or limit hours due to rioting, vandalism or civil commotion and have coverage for the loss of income under business income insurance (also known as business interruption, or BI) do have coverage. Coverage is typically triggered if there is direct physical damage to the premises.

What if a business is unable to access its property due to a government order? If there is a curfew in place, how will that impact a business?

While insurance policies vary, typically there is business interruption coverage for civil authority orders, such as curfews (when a business has reduced hours) or when a business is unable to access its property due to a government order requiring the business to close. Such coverage nearly always requires the existence of property damage within some limited geographic radius surrounding the policyholder’s location. This often ranges from 1 to 10 miles. Typically civil authority coverage has a waiting period of 24 to 72 hours, depending on the policy, before a policyholder can begin claiming the benefits of coverage. Coverage typically lasts up to four weeks, but the time period can be extended by paying an additional premium. However, once a curfew is lifted and business can resume, coverage ceases. 

Is business income coverage subject to a deductible?

Under most policies, business income coverage is subject to either a waiting period, which acts like a form of deductible or a monetary deductible. 

How will the amount of the business income loss be determined for a business?

Under most policies, business income coverage includes both net income (the profit a business earns after expenses and allowable deductions) and the cost of continuing normal operations.

What information does a business need to support its business income claim?

Most insurers require the following:

  • Profit and Loss statements
  • Sales records
  • Income tax returns
  • Rent or mortgage statements
  • Payroll records

What if a business vehicle has been damaged in a riot?

Damage to vehicles is covered under the optional comprehensive portion of an auto policy. This provides reimbursement for damage to the vehicle and its contents caused by fire, falling objects, vandalism or riot. Comprehensive coverage also reimburses a business if the vehicle’s windshield is cracked or shattered. Some companies offer glass coverage without a deductible.

Any advice for business owners?

Know your risks! Every smart business owner recognizes that business insurance is an essential element of an overall business plan. It should be factored in with fixed operational expenses like utilities. Without adequate coverage, business owners may have to pay out-of-pocket for costly damages from a riot, hurricane or other disaster, which could spell financial ruin.

Business Risk, Insurance Industry

Triple-I CEO Tells U.S. House—Global Pandemics Are Uninsurable

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On May 21, Triple-I CEO Sean Kevelighan testified before the U.S. House of Representatives’ Small Business Committee on the subject of business interruption coverage.

Since the outbreak of COVID-19, some legislators and advocates have pushed for policies that would retroactively force insurers to pay for claims their insurance policies were not priced to cover. The U.S. House session, “Business Interruption Coverage: Are Policyholders Being Left Behind?,” gave members of the committee the opportunity to hear from policyholders and other interested stakeholders.

“An event like a global pandemic is uninsurable,” said Kevelighan in his statement. “Unlike a typical covered catastrophe, which is limited in terms of geography and time, pandemics have the potential to impact everywhere, all at once…. As such, this type of magnitude requires government resources to step in and provide support.”

Property business insurance, in general, is meant to cover physical damage from perils like fire, tornado, or hurricane,” he said. Forcing insurers to cover losses related to the pandemic – which don’t involve physical damage to property – would cost the industry between $150 billion to $400 billion per month.

“Make no mistake; retroactive business interruption payouts would bankrupt insurers,” said Kevelighan.  “A recent Triple-I economic analysis determined this type of approach would decimate the industry’s financial resources in a matter of months, and at a time it needs those monies for major natural disasters that insurance policies cover, such as tornadoes, hurricanes, and wildfires.”

 “Any efforts to retroactively rewrite business interruption policies are not only unconstitutional (Article I) but would imperil the insurance industry’s ability to pay covered insurance claims filed by American homeowners, drivers, and injured workers,” Kevelighan said.

“The current government shut-down orders do not trigger the vast majority of standard business interruption policies because those orders do not qualify as direct physical loss to property—a requirement under the policies,” he said.

“The insurance industry is stepping up for Americans, with the likes of $10.5 billion in personal auto insurance premium relief, $220 million in charitable donations, and even more by keeping nearly two million Americans employed so insurance customers will be covered, and have their claims handled, when other disasters strike,” Kevelighan concluded.

View the full testimony and a recording of the webcast here.

The insurance industry is united in its position that pandemics are uninsurable, and the industry has some formidable support in that view. In a letter to the committee, the National Association of Insurance Commissioners (NAIC) said: “The current COVID-19 crisis has highlighted that many existing business interruption (BI) policies have specific exclusions for viruses or other diseases, and coverage is generally only triggered by actual physical damage. Therefore, these policies were generally not designed or priced to provide coverage for claims arising from COVID-19.”

The NAIC letter said that the group opposes efforts to legislatively apply business interruption coverage retroactively to claims based on COVID-19 and “has serious concerns that requiring retroactive coverage of BI claims based on COVID-19 would pose significant risks to the solvency of insurance companies and could have systemic impacts on the industry as a whole and potentially the financial system.”

And in a letter to President Trump on May 18, six Republican Senators warned that altering insurance law to cover all pandemic claims under business interruption policies would devastate the capital reserved for paying other insurance claims.

Business Insurance, Business Risk, Legal Environment

COVID-19 Wrap-Up:BI Coverage Continues to Make Headlines

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From new litigation to proposed legislation, debate over whether insurers should be required to pay for business losses related to the coronavirus pandemic remain in the news. 

Restaurants Sue Insurers Over Business Interruption Claims  

Proprietors of more than 10 restaurants, bars, and bakeries in Washington, D.C., joined a growing list of restaurateurs seeking coverage for pandemic-related damages, The Washington Post reports.   

The Post interviewed Triple-I CEO Sean Kevelighan and Triple-I non-resident scholar Michael Menapace, who explained why the suits are unreasonable and threaten the insurance industry’s solvency. 

“The insurance business works by spreading risk around so the industry isn’t hit all at once with claims,”  Kevelighan says. “A pandemic disrupts business far and wide, with no end date in sight.” 

About 40 percent of all companies have business interruption insurance, and most policies do not cover COVID-19.  If lawmakers retroactively require carriers to pay these unplanned-for claims, it could cost the insurance industry $150 billion a month, which would quickly deplete its $800 billion surplus. 

Policyholder Pulls COVID-19 Suit Against Broker, Insurer Business Insurance May 20, 2020 

Insurance Speak: Business Interruption Claims and COVID-19 Property/Casualty 360, May 20, 2020 

COVID-19 and Business Interruption Insurance – How to File a Claim the Right Way Franchising.com, May 19, 2020 

Coronavirus Pandemic Threatens Run on Business Interruption Policies Sold by Captive Insurance Risk Pools Forbes.com, May 19. 2020 

California Music Venues Sue Insurer over Business Interruption Related to COVID-19 Insurance Journal, May 15, 2020 

La. Lawmakers Scrap Business Interruption Bill

Louisiana lawmakers scrapped a bill that would have forced insurers to cover retroactive business interruption claims due to COVID-19, Business Insurance reports. 

However, state senators agreed to rewrite and amend Senate Bill 477 to allow a proposal requiring insurers to clarify exclusions on business interruption policies to move ahead. 

The scrapping of the Louisiana proposal follows last week’s decision by the Council of the District of Columbia not to go ahead with a proposal to force insurers to provide retroactive business interruption coverage on small-business COVID-19 claims. 

Coronavirus Updates in Louisiana: 35,038 COVID-19 Cases, 2,458 Deaths, WDSU 6, New Orleans, May 19, 2020 

Dozens of Workers at 3 Louisiana Crawfish Farms Test Positive for COVID-19, 4 WWL, New Orleans, May 19, 2020 

Red Flags Found at Louisiana Nursing Homes Ravaged by Coronavirus, NOLA.com, May 19, 2020 

Pa. Bill Would Define COVID-19 as Property Damage 

The Pennsylvania Senate is weighing a bill that would include losses spurred by the COVID-19 global pandemic under property and business interruption insurance coverage, Property/Casualty 360 reports. 

Senate Bill 1127 doesn’t explicitly state that insurers must cover COVID-19 business interruption claims. The bill states that if a covered property is located within a municipality where “the presence of the COVID-19 coronavirus has otherwise been detected,” that property is “deemed to have experienced property damage.” 

It also states that Gov. Tom Wolf’s March 19 emergency order to close businesses is to be considered an order of civil authority under a first-party insurance policy which limits, prohibits, or restricts access to non-life-sustaining business locations “as a direct result of physical damage at or in the immediate vicinity of those locations.”  

Coronavirus: 63,666 cases of COVID-19 in Pennsylvania, WGAL News 8, May 20, 2020 

Nursing Homes in Southeast Pa. Hit Hard By Coronavirus Deaths, New Data Shows, NBC 10 Philadelphia, May 20, 2020 

Pa. Releases Names of Nursing Homes with Coronavirus Cases, Deaths, Philadelphia Inquirer, May 19, 2020 

Pa. Supreme Court Rejects Emergent Application to Consolidate COVID-19 Business Interruption Claims JDSupra.com, May 19, 2020 

Pa. Insurance Commissioner Warns Businesses of Increased Liability Risks If Defying Coronavirus Shutdow Orders KDKA 2, Pittsburgh, May 11, 2020 

Publisher Appeals COVID-19 Ruling Denying Coverage 

A magazine publisher is appealing a federal court ruling in favor of an insurer in a coronavirus-related business interruption dispute, Business Insurance reports. 

In one of the first court rulings on the business interruption coverage issue, U.S. District Court Judge Valerie E. Caproni, in the Southern District of New York, said the policyholder’s attorney deserved “a gold star for creativity” but the loss was not covered under the policy issued by the unit of Hartford Financial Services Group Inc. 

From the Triple-I Blog

REQUIRING INSURERS TO COVER PANDEMIC-RELATED SHUTDOWNS WOULD JEOPARDIZE INDUSTRY’S SOLVENCY, EXPERTS SAY

TRIPLE-I LAUNCHES CAMPAIGN TO SUPPORT RESILIENCY OF THE ECONOMY DURING THE CORONAVIRUS PANDEMIC

WEBINAR: BUILDING RESILIENT BUSINESSES AND COMMUNITIES IN THE TIME OF COVID-19

U.S. TREASURY WEIGHS IN ON DEBATE SURROUNDING BUSINESS INTERRUPTION INSURANCE

WORKERS COMP, LIABILITY NEXT UP FOR VIRUS-RELATED INSURANCE DISPUTES

Business Risk, Insurance Industry

Requiring insurers to cover pandemic-related shutdowns would jeopardize industry’s solvency, experts say

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Most insurance experts believe legislative proposals that would require insurers to cover business-interruption (BI) claims stemming from COVID-19 related shutdowns, even if the insurance policies exclude pandemic-related losses, threaten the solvency of the insurance industry. This is the finding of a survey conducted by the Wisconsin School of Business and the Center for Insurance Policy and Research of the National Association of Insurance Commissioners (NAIC).

The survey also found most experts believe the private market will have a difficult time efficiently supplying BI coverage for pandemics, given the systemic, correlated, and non-diversifiable nature of the peril.

Many survey respondents felt only the federal government can provide coverage for correlated risks because it can spread the cost through taxation, long-run borrowing, and deficit financing. But whether provided by only the federal government or the private market, the pricing and affordability of coverage were indicated to be issues for both.

Most said they believe the private market can supply BI coverage for pandemics with an effective federal partnership. Some questioned whether the Terrorism Risk Insurance Program (TRIP) is a good model for pandemic insurance, given the similarities between the pandemic and terrorism perils.

The complete survey can be found here.