Cover it anyway?
As usual, every crisis has a connection to insurance. With hurricanes, the focus is primarily on property insurance, with business interruption coverage claims prevalent but not front page news. In our current situation, one can’t search “insurance and COVID-19” without seeing a discussion of whether a COVID-19 claim will be covered, with most experts reporting that these policies don’t have coverage for pandemics, viruses and the like. Others are saying that forcing commercial insurers to pay these claims when there is a specific exclusion is a recipe for the insurer’s financial ruin.
Interestingly, New York State, for example, enacted an emergency order that specifies that the coronavirus causes physical damages. So that’s all a New York small business owner would need to request a business interruption claim be paid. Massachusetts and Ohio have joined New Jersey in pushing bills to eliminate ‘virus’ exclusions on existing business interruption insurance policies, per Reinsurance News. Those bills would also require insurance companies to retroactively provide coverage for COVID-19 on existing policies providing coverage for business interruption, loss of use, and occupancy.
Granted, just 34% of small businesses nationwide have business interruption coverage, according to the Insurance Information Institute. But that’s why there are disaster declarations and the reason for Governor DeSantis activating the Bridge Loan Program we mentioned in our previous story.
Losses from event cancellation could be significant, too, for companies that write it, especially given it represents a small percentage of the overall premium. Many of our readers had planned events for their customers to attend with venues and hotel rooms locked in. What happens now that all these gatherings have been ordered cancelled?
Whether there is or isn’t coverage on policies, insurance companies are going to be hit with litigation costs from all the claims. Public adjusters are readily advertising their services during this outbreak, which is their right. Steve Badger, a Partner at Zelle Law hit it on the head with this quote in a recent trade article: “Creative and aggressive policyholder attorneys sense opportunity and will file lawsuits.”
Florida’s courts are adjusting as well to the pandemic. With courthouses closed to the public, much of the caseload has been put on hold. Critical court proceedings are being held online, even oral arguments. Interestingly, where judges have avoided even telephone conferences in the past, some say our current situation may open the door to high-tech methods that last beyond the crisis. Florida Supreme Court Justice Charles Canady released a brief video talking about the challenge of balancing the rule of law with public safety.
The Society of Claims Professionals has put together the Good Practice Guide for Claims Professionals, a concise guide for “surge events” like our current one. It recommends insurance companies put together a surge group, with members from key departments, to help manage – and keep ahead of – customer demand. This is a time when folks expect good customer service. This is our time to shine!
LMA Newsletter of 3-30-20