P&C: Business Interruption Insurance—Here Come the Lawyers
From Artemis:
Legal actions and efforts to enable businesses and also insurers to
force through claims related to business interruption appear to be
expanding, with potentially significant ramifications for some in the
reinsurance and insurance-linked securities (ILS) market should any
succeed.
It largely comes down to contract wording interpretation and the
understandable desperation of business owners facing a significant
financial hit, it seems.
These efforts tend to focus on attempts to prove that the ongoing Covid-19 coronavirus pandemic
has caused some form of property damage, enabling claims on property
insurance towers that include business interruption and even on property
catastrophe reinsurance programs.
As we explained yesterday, there
have been some efforts to force coronavirus pandemic related
interruption claims into property catastrophe reinsurance programs.
We
understand that one of these efforts is ongoing and features a smaller
Canadian primary insurer that is attempting to claim that it should be
able to trigger its property catastrophe reinsurance as the Covid-19
outbreak has caused damage claims under property insurance covers it has
underwritten.
That boils down to the same issue as has been
raised in the New Jersey General Assembly, where a bill has been tabled
that calls for all coronavirus business interruption related claims to
be honoured.
This bill was first raised last week but has since
been amended and was expected to go back to the court yesterday, but was
never raised (possibly due to objection).
Analysts at Credit
Suisse explained how they see this NJ business interruption related
bill, “The updated bill requires all property insurance policies that
legally provide coverage for the loss of use of property and for
occupancy and business interruption to be interpreted as including
business interruption coverage due to COVID-19. Under the bill, insurers
paying out COVID-19 claims under the potential new law would be
eligible to file for reimbursement/relief with the NJ state Commissioner
of Banking and Insurance.
“The costs would then be passed on and
shared among insurers operating in NJ in the form of the already
established annual special purpose apportionment that insurers pay
annually to fund the state’s Division of Insurance. The law would
retroactively go into effect as of March 9th, 2020, and would apply to
insured businesses with less than 100 employees working 25+ hour weeks.”
These
legal attempts to force coronavirus business interruption claims
through are expanding now, with action also being seen in Ohio and
Massachusetts.
In Ohio, House Bill 589 would require business
interruption policies to cover “business interruption due to global
virus transmission or pandemic during the state of emergency,” analysts
at Credit Suisse said....
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MUCH MORE
