So yeah, we've been spending a lot of time blogging on this issue, but each week, it seems, brings a new facet. For those just tuning in, Business Interruption coverage "is supposed to help reimburse lost revenue due to a covered, physical loss (such as a fire, or a flood, etc). The issue at hand is whether or not a business forced to close because of the current pandemic is entitled to such reimbursement, since the physical structure remains intact (and distinct from a claim arising from actual contamination)."
There has been a growing chorus calling for the government (whether at the state or national level isn't always quote clear) to force carriers to provide this coverage and begin processing, and paying, BI claims based on mandated closures, but no actual physical loss.
One can see the problem here, of course: this coverage was never offered, underwritten, or issued by the carriers, and no premium for it was ever collected by them. In this case, truly free coverage.
It's not hard to imagine the consequence:
There has been a growing chorus calling for the government (whether at the state or national level isn't always quote clear) to force carriers to provide this coverage and begin processing, and paying, BI claims based on mandated closures, but no actual physical loss.
One can see the problem here, of course: this coverage was never offered, underwritten, or issued by the carriers, and no premium for it was ever collected by them. In this case, truly free coverage.
It's not hard to imagine the consequence:
"Chubb Ltd. Chief Executive Officer Evan Greenberg has a stark warning for policy makers pushing insurers to pay out some uncovered business-interruption losses.
“The insurance industry is a fundamental part of the economic plumbing of this country,” Greenberg said in an interview Thursday. Forcing insurers to foot the bill for losses not covered by policies “would do great damage. It would bankrupt the industry.” [emphasis added]
Well, that certainly gets one's attention.
But surely there must be a middle ground between this all or (literally) nothing conundrum, and indeed there may well be:
"[Two leading industry groups] are calling on our federal lawmakers to adopt the COVID-19 Business and Employee Continuity and Recovery Fund (the “Recovery Fund”). The Recovery Fund would establish a streamlined and tailored federal fund to provide rapid liquidity to small businesses and commercial sectors impaired by COVID-19 through a business interruption claims adjudication process."
While I am generally not a fan of "may I have some more" from the Feds, this seems like the most judicious approach: after all, as we noted in the post at that first link, this is exactly the type of role government should be playing in this kind of situation.
Will it be enough?
Well, only time will tell, but this is the first reasonable proposal I've seen so far.
FWIW.
[Hat Tip for Chubb link: FoIB Bill M]
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