In a webinar, economists at the Insurance Information Institute (Triple-I) warned that unconstitutional retroactive business interruption claims payouts for business interruption coverage could damage both the insurance industry and the U.S. economy, and that the effects of the COVID-19 pandemic on the nation’s property/casualty (P/C) insurance markets can be managed only if policies are enforced as written. Triple-I CEO and President Sean Kevelighan said that the COVID-19 pandemic is unprecedented in the industry since it has a negative impact on all industries and major economies. According to Kevelighan, any attempt to force insurers to make business interruption payouts retroactively would be unconstitutional and would irreparably damage financial stability. Triple-I Senior Economist Michel Leonard estimated that U.S insurers would have to pay anywhere from approximately $150 billion to nearly $380 billion each month in business interruption policy claims for which they had collected no premium. Beyond COVID-19, Triple-I Chief Economist Steven Weisbart added the importance of maintaining the stability of the industry in order to respond to natural catastrophes. Weisbart used Hurricane Katrina as a comparison and said that in 2005 it was the single-worst natural catastrophe event the industry had, with $52 billion in losses. He said that the “midpoint” level of some COVID-19 business interruption costs to the industry from possible state and federal legislation is about $102 billion, or “two Katrinas in a single month.” Weisbart also discussed the potential financial trajectory of the pandemic, and its impact on specific lines.
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