Category Archives: Business Risk

FAQ: Riots and Business Insurance

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.

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

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.

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

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, DeathsPhiladelphia 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

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

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.

Workers Comp, Liability Next Up for Virus-Related Insurance Disputes

Coronavirus-related insurance litigation is likely to move beyond business interruption coverage and into workers comp and general liability policy lines as states begin to lift restrictions on economic activity.

“There’s just going to be a bloodbath of litigation over the next 10 years,” former Mississippi Attorney General and counsel at  Weisbrod Matteis & Copley Jim Hood told Bloomberg Law this week. “Even if the governor tells you to open up, that’s not going to protect you from a lawsuit.”

The Trump administration and Republican lawmakers are insisting that an employer liability shield be included in the next round of pandemic relief legislation, but it’s unclear whether Democrats will go along with the idea.

Ask the Experts: The Impact of COVID-19 on Workers Compensation (Property/Casualty 360, May 7, 2020)

Bill to Boost Aid to Dependents of Workers Killed by COVID-19 (Business Insurance, May 6, 2020)

Workplace Testing Guide May Provide Target for Lawsuits (Business Insurance, May 5, 2020)

A Better Workers’ Comp System:  Silver Lining of COVID-19? (Property/Casualty 360, May 1, 2020)

California Facilitates Workers Comp for Virus Claims

California Gov. Gavin Newsom signed an executive order Wednesday that will make it easier for essential workers who contract COVID-19 to obtain workers’ compensations benefits. The governor said the order streamlines workers’ comp claims and establishes a rebuttable presumption that any essential workers infected with COVID-19 contracted the virus on the job. In effect, the change shifts the burden of proof that typically falls on workers and instead requires companies or insurers to prove that the employees didn’t get sick at work.

The California Federation of Labor, which asked for the change in a March 27 letter to the governor and legislative leaders, applauded the order. Dozens of business groups, led by the California Chamber of Commerce, pushed back last month on the labor federation’s request, saying the changes would force businesses to be the “safety net to mitigate the unprecedented outcomes of this natural disaster and the government’s response.”

Executive Order Threatens Stability of California Workers Compensation System (American Property Casualty Insurance Association press release, May 6, 2020)

California to Give Workers Comp to All Essential Employees Infected With Coronavirus (The Hill, May 6, 2020)

NCCI: Workers Comp Costs and COVID-19

If only 10 percent of health care workers contract COVID-19 and all of their claims are deemed compensable, workers’ compensation loss costs for that sector could double or even triple in some states, according to an analysis by the National Council on Compensation Insurance (NCCI).

Claims Journal reports that, in NCCI’s worst-case scenario, 50 percent of workers are infected and 60 percent of their claims are deemed compensable. That would result in $81.5 billion in increased costs —or two and half times current workers’ compensation loss costs — for the 38 states and District of Columbia, where NCCI tracks claims data. If eligibility is limited to first responders and healthcare workers and only 5 percent of those workers are infected, Claims Journal says, the increase in costs would be just $2 billion, assuming 60 percent of claims are paid.

From the Triple-I Blog:

ECONOMY STARTS REOPENING AMID NEW PANDEMIC PROJECTIONS

 

 

Business Interruption Coverage: Policy Language Rules

Whether business interruption coverage in property policies applies to COVID-19-related losses has become one of the dominant insurance debates during this pandemic. Lawsuits have been filed – some even before insurers have denied a claim – seeking to establish that policyholders are entitled to coverage for losses sustained during the current shutdowns. 

The debate often focuses on a simple phrase in the insurance policy: “direct physical loss or damage.” Business interruption coverage can apply to losses stemming from direct physical loss or damage. Losses that didn’t come from direct physical damages aren’t covered.

Michael Menapace, Esq.
Wiggin and Dana LLP

 “A property policy may, for example, pay to repair the damage caused by a fire and may cover the loss of business during the reconstruction period,” writes Michael Menapace, a professor of insurance law at Quinnipiac University School of Law and a Triple-I Non-Resident Scholar. “But here’s the rub.  Are the business interruptions related to COVID-19 caused by physical damage to property?”

Insurers say no, arguing that “damage to property” requires structural alteration like one would find in a typical claim, where, say, a fire destroyed the interior of a building or wind damaged windows and furniture.

The virus, on the other hand, leaves no visible imprint. Left alone, it can’t survive long and, after it has perished, whatever it was attached to is as good as before. Even if some remediation is needed – like cleaning metal surfaces – insurers might argue that this is no different from cleaning dirt off a surface. They cite cases in which judges have ruled there’s no physical damage from mold if the mold can be cleaned off.

Departing from common sense

Others depart from this common-sense, legally recognized definition. Some plaintiffs’ attorneys argue that if coronavirus is not direct physical damage then insurers would not have created an exclusion for viruses in the first place. Many insurers added exclusions for losses from viruses and communicable diseases after the SARS outbreak in 2003. 

Policy language, Menapace says, controls whether COVID-19 interruptions are covered. Some policies have standard terms and exclusions, some provide “all-risk” coverage – covering loss arising from any fortuitous cause except those specifically excluded – and others are variations on these types.

“The threshold issue will be whether the insureds can prove their business losses are caused by ‘physical damage to property’,” he writes. 

In past cases, where there is direct physical loss to property – such as contaminated food that couldn’t be sold or a building rendered useless by asbestos contamination – courts have found business interruption coverage was triggered. But when an earthquake caused a power loss in two factories, courts found the only injury was a shutdown of manufacturing operations that didn’t constitute “direct physical loss or damage.” 

What About Current Claims?

Are business interruptions related to COVID-19 the result of the government restrictions, or are they due to the physical loss to their property?  Menapace writes that many of the current claims would seem not to trigger the standard coverage in a commercial business interruption policy, but he cautions that this might not always be the case.

A true “all-risk policy,” he writes, “generally would not distinguish between business interruption losses due to government action or direct physical loss because all-risk policies cover all losses except those specifically excluded.”

But most commercial property policies aren’t true “all-risk policies”; instead, they typically cover business interruption losses “caused by direct physical damage to property” at or near the insured premises. 

“That will be difficult burden for policyholders to meet,” Menapace says.

Some policies exclude coverage for losses resulting from mold, fungi, or bacteria.  Because COVID-19 is a virus, that exclusion might not apply. Other policies exclude viruses, diseases, or pandemics. 

“If a policyholder believes it may have a claim,” Menapace advises, “it should provide prompt notice to its insurer(s) so it does not risk a denial based on late notice. Likewise, once the claim has been made, it is essential that the insured cooperate with the insurer, including providing timely proof of loss.”

Resources:

Business Income (Interruption): Key Facts

The True Cost of Rewriting Business Income (Interruption) Policies

Triple-I Briefing: Surplus Is Key to Insurers Keeping Policyholder PromisesISO Excluded Coronavirus Coverage 15 Years Ago

Economy Starts Reopening Amid New Pandemic Projections

Business interruption insurance and liability issues remain on the front burners as governments begin gradually “reopening the economy” amid scary new projections about the pandemic.

Trump Says Task Force Will Wind Down (The New York Times, May 5, 2020)

Pennsylvania’s Coronavirus Death Toll More Than Tripled in New Projection (Lehigh Valley Live, May 5, 2020)

Models Project Sharp Rise in Deaths as States Reopen (The New York Times, May 4, 2020)

D.C. Business Interruption Insurance Move on Hold

A measure that would make it easier for small businesses in Washington, D.C. to claim coronavirus-related damages under business interruption insurance policies is on hold after six of the 12 D.C. Council members raised concerns about its legality and the costs it could impose on insurers.

Council Chairman Phil Mendelson struck the language from a broader pandemic emergency bill to allow for more debate. Councilman Charles Allen had spearheaded the measure after many small businesses have seen their insurers deny such claims.

The American Property Casualty Insurance Association estimates local businesses could claim losses of hundreds of millions of dollars each month.

“These numbers dwarf the premiums for all relevant commercial property risks in the key insurance lines for D.C., which are estimated at $16 million a month,” David Sampson, the association’s president and CEO, wrote in a statement. “We oppose constitutionally flawed legislation that retroactively rewrites insurance contracts and threatens the stability of the sector, to the detriment of all policyholders.”

Lloyd’s Syndicate Slams ‘Direct Physical Loss’ Claim in COVID Suit (Business Insurance, May 6, 2020)

Coalition Proposes Recovery Fund to Help Businesses During COVID-19 (Property/Casualty 360, May 5, 2020)

A.M. Best: BI Insurers Face ‘Existential Threat’ if Forced to Cover COVID-19 (Best’s Insurance News & Analysis, May 5, 2020)

Utah Governor Signs Bill Shielding Businesses, Property Owners from Coronavirus-Related Suits (The Salt Lake Tribune, May 4, 2020)

Managing Risk as Businesses Reopen After COVID-19 (Property/Casualty 360, May 4, 2020)

U.K. Companies to Shun Business Interruption Insurance (Financial Times, May 3, 2020)

Care Homes Seek Shield From Lawsuits

Faced with 20,000 coronavirus deaths and counting, the nation’s nursing homes are pushing back against a potential flood of lawsuits with a sweeping lobbying effort to get states to grant them emergency protection from claims of inadequate care.

The Associated Press reports that at least 15 states have enacted laws or governors’ orders that explicitly or apparently provide nursing homes and long-term care facilities some protection from lawsuits arising from the crisis. And in the case of New York, which leads the nation in deaths in such facilities, a lobbying group wrote the first draft of a measure that apparently makes it the only state with specific protection from both civil lawsuits and criminal prosecution.

Feds Consider Relaxing Infection Control in U.S. Nursing Homes (USA Today, May 5, 2020)

1,700 More Nursing Home Deaths From COVID-19 Now Reported in New York (CNY Central, May 5, 2020)

The Grim Post-COVID-19 Future for Nursing Homes (Forbes, May 4, 2020)

Data Shows Reach of COVID-19 in Illinois Nursing Homes: At Least 286 Deaths (Chicago Tribune, April 19, 2020)

A Toast to Marine Insurance!

By John Novaria, Managing Director, Amplify

When you think of winemaking, you picture grapes on the vine and a hearty glass of red on your table. But you probably don’t think of all the steps involved in the production of wine and the fact that those grapes – and later, the finished product – travel long distances to reach our palates.

That’s where marine insurance comes in: to protect businesses along the supply chain from the unexpected.

The American Institute of Marine Underwriters (AIMU) drew a robust crowd to its recent webinar, “From Vine to Wine and the Fire In Between,” where participants learned of the risks associated with wine production and the coverages that are designed to mitigate losses. The two-hour session is part of AIMU’s extensive and popular educational series, and drew a crowd of underwriters, claims experts and brokers from the ranks of marine insurers and beyond.

“One of the biggest roles we perform is education, and it’s not limited to our members,” says John Miklus, President of AIMU. “Marine touches so many aspects of business that there’s a real thirst for knowledge in the broader insurance community and we try to quench that thirst.”

Pamela Schultz, Jonathan Thames and Erik Kowalewsky of Hinshaw & Culbertson opened by discussing the effects of the 2017 wildfires on the Napa and Sonoma wine growers and wineries, where 10 percent of the harvest was still on the vine when the fires started.

There are nearly 20 steps involved in wine production, including include growing, harvesting, fermenting, storage, barreling, aging, blending, bottling, labeling and distributing. Each presents opportunities for things to go wrong.

Thames explained that Stock Throughput is a form of marine coverage that insures goods in all their physical states along the supply chain with the exception of damage caused by the processes of turning the raw materials into the finished products. He said policies are generally very broadly worded and cover all risks.

Schultz pointed out how marine insurance comes into play during shipment. Stock Throughput policies are designed to cover supply chains and anything that moves inventory against loss due to:

  • Extreme weather and natural disasters can cause supply chain interruptions and even loss of product.
  • Transportation: Obviously, wine has to get from the vineyard to the table and that table may be anywhere in the world.
  • Trade problems/disruption: This affects imports and exports, especially delays due to current COVID-19 crisis.
  • Lack of Control: Products are sometimes shipped long distances, and it’s difficult to know everything about every link of the supply or travel chain.
  • Invaders: Yes, pests have been known to get into wine and cause damage and so can fumigation.
  • CTL: Constructive Total Loss becomes an issue if the wine is stolen. Most policies exclude consumption of wine, but Schultz said that hasn’t stopped some insureds from trying to claim it on that basis.

The 2017 California wildfires brought into focus the issue of smoke taint. The smoke that lingers for weeks after the fires are extinguished can taint the grapes, rendering a wine unpalatable, or worse, undrinkable.

Thames noted that smoke taint claims don’t arise until after fermentation, after the wine has been tasted, and the grower must prove damage with scientific evidence and serve notice of potential loss within 60 days. However, he said there are cost effective processes winemakers can put in place beforehand to mitigate the effect.

The presenters discussed the difference between crop insurance and whole farm revenue protection, both of which offer only limited protection to the grower. Crop insurance is not a 100 percent indemnity product; it only covers the grapes pre-harvest, so there will always be a gap. Limits are based on past yields so it’s difficult to expand limits in the first few years.

As a result of the 2017 fires in Oregon, one winemaker now requires its growers to carry crop insurance and pays half the premium.

Whole farm revenue protection insures against lost revenue, but doesn’t protect particular crops as it is not a property policy. To make a claim on this policy the insured must establish that farm revenue is down as a result of the winery rejecting the grapes.

Participants were invited to vote on their favorite wine, and the overwhelming choice was Red, at 70 percent. White garnered 17 percent of the vote and Rose 12 percent.

Upcoming AIMU courses include Yacht Insurance Fundamentals, which offers 6 CE credits, and Introduction to Static Risk Insurance: Warehouse Basics, offering 3 credits.

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/27/2020)

Accounting Rules
NAIC Working Group Approves Flexible COVID-19 Accounting Rules
Automobile Insurance
How the Coronavirus Could Change U.S. Personal Auto Insurance
Business Interruption
Travelers, Insured Law Firm Spar Over Civil Authority Business Income Loss Claim
States Seek to Force Insurance Companies to Pay Those With Business Interruption Policies
Covid-19 Business Interruption Existential Threat, Reinsurance Capital Availability Key: Willis Re
Credit Insurance
Governments should backstop trade credit
Litigation
The Race Is on to Lead Business Interruption Insurance Litigation
What Won’t Cure Corona: Lawsuits
6 Types Of Employment Lawsuits To Expect In The Wake Of COVID-19
Editorial: Stopping a Lawsuit Epidemic
Kudlow: Businesses shouldn’t be held liable for employees and customers getting coronavirus
Corporate America Seeks Legal Protection for When Coronavirus Lockedowns Lift
Profits & Losses
Coronavirus Costs Weigh on Travelers’ Profit
Coronavirus Will Be Largest Event in Insurance History, Says Chubb CEO
Coronavirus To Be Largest Industry Loss Ever: Chubb’s Greenberg & Lloyd’s Neal
Covid-19 P&C Insurance Industry Loss Estimated $40bn – $80bn: Dowling
Chubb Classifies Covid-19 as a Catastrophe Event
Covid-19 Claims Manageable, But Reinsurers Face Formidable Challenges: Willis Re
Specialty Lines
Companies Can Expect Higher D&O Rates, Lower Limits: Experts
Lack of Adequate Insurance Puts Healthcare Workers At Risk of Malpractice Lawsuits
Workers Compensation
States Easing Path to Workers Compensation Benefits for Coronavirus Workers
Changing Virus Guidance Creates Balancing Act For Essential Employers
Employers Pushing Back as States Expand Work Comp to Cover COVID-19
Workplace Safety For COVID-19 Essential Workers
From the Triple-I Blog:
TRIPLE-I CEO AMONG PANELISTS DISCUSSING BUSINESS INTERRUPTION INSURANCE LEGISLATION
INSURERS RESPOND TO COVID-19 (4/24/2020)
CORONAVIRUS WRAP-UP: LIFE AND HEALTH INSURANCE (4/22/2020)
CORONAVIRUS WRAP-UP: DATA AND VISUALIZATIONS (4/20/2020)

Triple-I CEO Among Panelists Discussing Business Interruption Insurance Legislation

Sean Kevelighan

Triple-I CEO Sean Kevelighan today joined legislators and legal experts to discuss proposed measures that could retroactively rewrite business interruption insurance policies.

“The insurance industry is applying forward-thinking solutions to take care of its customers, communities, and employees during the COVID-19 crisis,” Kevelighan said, citing more than $10 billion so far returned to customers through premium relief; $200 million in charitable donations; and insurers pledging not to lay off employees during the crisis and implementing innovative solutions to conduct daily operations while respecting social distancing. “We’re deeply engaged in mitigating the economic impact of this pandemic.”

But the industry can only do these things – while keeping its promises to policyholders and preparing for impending catastrophes – if policyholder surplus isn’t eliminated, as it could be if some of the proposed legislative “solutions” were enacted.

Legislation has been discussed or introduced in Louisiana, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and South Carolina that would retroactively enact business interruption coverage into existing policies despite an absence of the physical damage required in property policies and/or express exclusions for communicable diseases in those policies.

Kevelighan explained how policyholder surplus provides a cushion that enables insurers to meet their obligations, even when large, unexpected catastrophes occur. He showed how retroactively rewriting insurance contracts could make it impossible for insurers to play their critical role as “financial first responders.”

The scenarios he discussed could cost the industry $150 billion and $380 billion per month – “quickly eliminating the surplus it has taken the industry centuries to accumulate.”

And they would do this in the midst of a tornado season that is shaping up to be the deadliest in eight years and as a “more active than normal” hurricane season approaches.

Kevelighan made his remarks during a webinar sponsored by the National Council of Insurance Legislators (NCOIL) and the Rutgers Center for Risk and Responsibility at Rutgers Law School. Other panelists included NCOIL President and Indiana Rep. Matt Lehman; New Jersey Assemblyman Lou Greenwald; and Jay Feinman and Adam Scales, Professors of Law at Rutgers Law School and Co-Directors of the Rutgers Center for Risk and Responsibility.

The panelists all expressed support for the creation of a COVID-19 Business Interruption and Cancellation Claims Fund, similar to the 9/11 Victims Compensation Fund enacted by Congress in 2001, for businesses suffering from costs related to the interruption of their businesses, as well as the many associations that have had to cancel events. Funded by the federal government and operated by a special federal administrator, it would facilitate distribution of federal funds and liquidity to impacted businesses during this time of incalculable business interruption.

Click here to view the presentation.