Among the many pressing circumstances that warrant critical discussion during times such as these, is the topic of Business Interruption (BINT) claims. The struggle to navigate the ongoing economic challenges of COVID-19, paired with the ever-growing civil unrest occurring across the nation, has severely impacted our communities and the countless businesses that operate within them.
Typically, Business Interruption claims are filed when businesses endure sudden losses of revenue due to conditions beyond their control – natural or not. Policy coverage could include damage sustained via social disorder and can also cover weather-related perils such as earthquakes, fires, floods…and even pandemics.
However, prior to and most likely post-COVID-19, the basic ISO policies bare language that excludes virus-related attacks. As would be expected, that language has been carried over into many of the Business Interruption endorsements presently available within the industry.
Additionally, these endorsements typically require that physical damage be sustained to the business’ venue in which they operate, resulting in a halting (partially or in whole) of operations in order for coverage to be afforded. Furthermore, few of those policies (if any) address the issue of businesses being mandated to close as a result of an enacted civil order (Federal, State, County, City, or otherwise). All of these combined aspects have resulted in millions of business enterprises failing to attain coverage throughout the course of the coronavirus era.
The decision to generally omit pandemic coverage from policies is based on realistic and sustainable underwriting principles that are in the interest of avoiding a bottleneck of claim submissions and the simultaneous depletion of available resources. Mr. Charles Chamness, NAMIC’s President & CEO, directly expressed this reasoning by stating, “pandemics simply are not insurable risks; they are too widespread, too severe, and too unpredictable, for the insurance industry to underwrite.”
Mr. Chamness’s concerns were further verified by Mr. David Sampson, President & CEO of American Property Casualty Insurers Association, when he cautioned, “the stability of the insurance sector could be harmed if policymakers mandate that insurers pay for losses not covered under existing policies.” Mr. Sampson referred to the APCIA’s $220-$383 billion per month loss estimate and stated that he assumes “there could be as many as 30 million claims from small business that suffered coronavirus-related losses.”
“While the U.S. insurance sector remains strong, if insurance companies are required to cover such claims, such an action would create substantial solvency risks for the sector, significantly undermine the ability of insurers to pay other types of claims, and potentially exacerbate the negative financial and economic impacts the country is currently experiencing,” says the NAIC.
However, continuous developments in the national crisis and newly proposed legislation regarding this matter have further magnified the challenges of the situation. It goes without saying, that the politicization of this issue is weighing heavily on the strategic action the P&C industry is taking in response.
A recently formed coalition between APCIA, NAMIC and the BIG-I (which represents 90% of the P&C industry) has proposed a “Business Continuity Protection Plan (BCPP)” that provides an alternative coverage endorsement that may avoid such devastating effects to many businesses in the future, if the business elects to purchase the coverage.
While this safeguard, if enacted by Congress, may serve to satisfy similar issues caused by future pandemics, it unfortunately does not address how we as an industry should handle the circumstances at hand. This is an issue we at Eberl began studying during the beginning stages of the coronavirus pandemic, in an ongoing effort to remain informed and therefore, provide the best service to our partners.
Eberl’s Here To Help
It’s important to remember, that regardless of how these complicated social and economic situations pan out in the upcoming months, insurers still retain an obligation to their customers to investigate and process the Business Interruption claims flowing through the insurance system which cannot be overlooked amid these conflicts.
Eberl stands ready to engage in thoughtful communication with our business partners where we’re prepared to assist in not only formulating a proper plan of action but offer essential staff support to insurers. Our adjuster network is prepared to provide the compassionate touch policyholders so desperately need during these trying times and our support teams are fully prepared to alleviate the mounting pressure of extreme claims influxes.
A new age of Business Interruption claims is upon us and we stand ready to assist our partners, carriers, and policyholders alike in navigating this ever-evolving era we’re operating in.
If your business needs additional support preparing for and managing Business Interruption claims, please fill out the form below to be contacted within 24 hours by an Eberl representative.