Business Insurance: California Business Interruption Coverage During COVID-19
BUSINESS INSURANCE: California Business Interruption/Loss Of Income Insurance During COVID-19
Normal business interruption plans do not offer coverage regarding contagious diseases like those of COVID-19, and have not been actuarially assessed to do so, noted major insurer organizations in a report sent in to Congress members of California Thursday.
The correspondence was sent in response to questions posed by members of California’s congressional delegation regarding COVID-19 and exclusion in standard commercial plans for viruses and pandemics, the National Association of Mutual Insurance Companies said in a statement.
Recent figures show that business continuity losses of 100 or fewer employees small business alone could reach up to $383 billion a month, while the U.S. property / casualty insurance industry’s overall worth is just $800 billion, the five insurer trade groups shared.
“The insurance industry must protect our solvency to pay on promises we have made to policies,” the statement added.
Insurers will maintain that “prompt payments are made in situations where coverage exists,” adding insurers are also engaging with consumers on topics such as flexibility in premium payments, according to the letter.
On March 26, the California Insurance Department called on insurers doing business in the state to provide information on business interruptions, civil authority, contingent business interruption, and supply chain coverage provided by existing commercial insurance policies.
California lawmakers, however, have yet to introduce legislation aimed at requiring insurers to cover losses from COVID-19 interruptions. So far, these bills have been introduced in Louisiana, New York, Ohio, Massachusetts and New Jersey.
April 2nd the letter addressing the U.S. Democratic Reps. Gilbert Cisneros and Rep. Mike Thompson and 31 other California lawmakers was signed by the National Association of Mutual Insurance Cos., the Independent Insurance Agents & Brokers of America, the American Property Casualty Insurance Association, the Reinsurance Association of America and the Council of Insurance Agents & Brokers.
Meanwhile, pressure is growing for the establishment of a federal pandemic risk and insurance backstop.
John Doyle, president and CEO of Marsh LLC, said in a letter to clients Thursday that a public / private pandemic risk insurance plan is “essential” to promote economic recovery and provide much-needed protection against potential future pandemic risks.
Mr. Doyle also wrote to Congress and the Trump administration to support Marsh in the development of such a program.
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