Was told today my business insurance is not covered for Business interruption for Coronavirus as it is a new unknown virus, any other business owners heard this and been told the same or are you covered?
My son works for an insurance broker company and he said that this is common. He said that policies say they will only insure agains named viruses, corona didn’t exist so most companies wil not be insured.
Even though the premiums taken may not have prices this in, i would be surprised if there isn’t a lot of leverage put into the insurers and their reinsurers to push their fairly healthy balance sheet reserves.
The main point of insurance and reinsurance and reinsurance is to provide resilience in times of stress.
i work for a primary insurer and a major reinsurer and that is the message we have been selling, admittedly not very profitably as the rates people are prepared to pay has been battered since the financial crisis.
None the less, these companies have reserves and can raise more, a bit like a mortgage holiday if there is an understanding that these will be used despite a lack of contractual obligation, hopefully the users of this service will remember and will pay a bit more to cover themselves in the future.
Nearly all policies require a property damage trigger to activate the business interruption cover.
@northstandsteve - You say your policy has a specific disease exclusion. This will probably apply to any Pandemic or Epidemic declared, so it sounds like it will be applied on your policy.
I would say generally, even without a specific exclusion, its unlikely BI losses for C-19 are covered under most policies.
Interruption by Civil Authority is a specific extension that large industrial companies buy. This is one of the few examples where BI cover is available where no property damage trigger is needed. However, even on a billion dollar policy, this would be sub-limited to 50M. It is hard to cover this element to full limit because it involves payment by insurers without accidental and fortuitous loss. Also aggregation issues come into play as any Civil Authority Order will affect multiple insureds.
Before people beat insurers to death, the only reason it works is the losses of the few are paid for by the many. For C-19, the worlds business has been interrupted. Insurance sector cannot pay for the downtown in GPD. I can also understand why policy holders may be disappointed that their policy doesn't cover BI resulting from a global lockdown.
There may be some flak aimed at companies that are posting profits at this time. Hancock's ill-advised attack on footballers already has focussed attention on rich execs, most of whom are unaffected by the crisis.
Insurance as a concept is not a waste of money. The mutual sharing of the price of risk is fundamental to our social construct.
Unfortunately most people, including me, are under insured.
There is a massive protection gap between what people pay premiums for and what they need in personal or joint extreme circumstances.
I am fortunate to work for a company that pays for death in service such that if I died (except by suicide) my mortgage would be paid off and my son would own my home outright and with his mum, and others be able to support his education.
That for me is a basic protection and loss of work through illness etc is more premiums, which I pay but not as much as I should.
Most insurers now look to pay out as quickly as possible and as well as possible unless they have a worry the claimant may be taking the piss.
My view it’s not a waste of money pooling the risk but the more transparent it is on both sides the more workable the pool is.
As pointed out above most standard commercial policies require a physical damage resulting in the business being interrupted to claim for business interruption.
However some policies will have an optional section for pandemic interruption, normally sub limited, most policyholders chose not to take this though. We've about 3,000 UK policies where we give £25k cover.
Our net loss will be in the region of 2-400m (USD) I suspect. Contract Frustration losses could be huge.
Wish I had thought of this situation as a BCP - however not beating myself up for not doing so.
Had a mail from my travel insurers two weeks ago saying roughly “ Covid 19 is now a pandemic - you know that now. If you travel, it’s up to you, not covered by us”
Read it and thought fair enough. Easy to dig out insurers and we have all had the hump with our individual personal experiences.
Would be reticent to dig out insurers in a panademic though.
Ps. If I die and they do not pay out, they can fooking do one...
My son owns a Running Shoe shop and as with others business interruption is not covered because it was not a notified disease.
This is an issue for the government to sort out. They need to make sure that insurance companies take their share of the pain. I think in future i am only going to pay for the legal minimum insurance for everything as insurance companies rarely pay out and are the lowest of the low!!!
My son owns a Running Shoe shop and as with others business interruption is not covered because it was not a notified disease.
This is an issue for the government to sort out. They need to make sure that insurance companies take their share of the pain. I think in future i am only going to pay for the legal minimum insurance for everything as insurance companies rarely pay out and are the lowest of the low!!!
Be interesting to see what the insurers of Wimbledon cancellation insurance do as I heard they are insured for £100m +. Think they may have pandemic insurance so I’m not sure insurers will get away without paying.
Be interesting to see what the insurers of Wimbledon cancellation insurance do as I heard they are insured for £100m +. Think they may have pandemic insurance so I’m not sure insurers will get away without paying.
There will be pay outs for Wimbledon, the Olympics etc etc as they took out specific event cancellation insurance. We write a $10m lines on most of the larger events such as these.
My son owns a Running Shoe shop and as with others business interruption is not covered because it was not a notified disease.
This is an issue for the government to sort out. They need to make sure that insurance companies take their share of the pain. I think in future i am only going to pay for the legal minimum insurance for everything as insurance companies rarely pay out and are the lowest of the low!!!
Who is he insured with, do you have the exact wording of the terms within the policy for Business interruption?
Your bog standard commercial policy tends to cover BI up to a level but only if is accompanied by a physical damage loss (i.e. fire, flood etc).
Some policies include cover for certain, specified, diseases forcing closure (I suspect this is what he may have in his policy and COVID 19 won't be specified).
Some Policies include cover for all diseases and forced closure (you may have read an action likely to happen against Hiscox refusing to pay).
I can't see it in the UK, but some of the US states are forcing insurers to pay even if they specifically exclude this cover, that'll rumble on for years through the courts I suspect.
Only in so much as speed of payment, not around coverage;
"Mr Woolard admitted that following conversations with insurers, it was clear that most business interruption policies held by small and medium-sized businesses only had basic cover which did not include pandemics and therefore insurers had no obligation to pay out in relation to Covid-19. "While this may be disappointing for the policyholder, we see no reasonable grounds to intervene in such circumstances," he said."
There's a great deal of press coverage at the moment regarding the Hiscox. I read this at the beginning of the pandemic and was of the belief, and still am, that their denial of access clause in the Business Interruption section of the policy should pay out in the event of closure ordered by the Government or local authority. They seem to be arguing that the intent wasn't to cover something like COVID-19 but it's the policy wording that counts unless there is a statement of intent in writing prior to the incident giving rise to the claim.
However, the Hiscox policy is quite different to most and in all honesty I dont expect many policies to cover this.
To be fair it would seem mental to pay out to companies due a pandemic, when they’d made a choice not to take out pandemic cover.
I doubt an awful lot of businesses actively chose not to take it.
Do insurance companies decide which policies their customers are allowed then?
In a word yes, Insurers decide the policy wording.
A lot of business insurance is still bought through brokers, so depends on what the broker offered and what they had access to....... theres also a lot of the direct polices (such as direct line) which only give BI in the event of a physical damage loss so pandemic is not even offered/covered at all so the insured won't have chosen not to take it..
To be fair it would seem mental to pay out to companies due a pandemic, when they’d made a choice not to take out pandemic cover.
I doubt an awful lot of businesses actively chose not to take it.
Ignorance is bliss then? as its a choice you could have taken out there will be no goodwill gesture at all, no chance.
My point was that I doubt many (%) were offered it and chose not to take it. And how many small business when they went to buy their insurance last year thought 'i must remember to ask about Pandemic BI insurance'......
The thing is, and the point has been touched on, why has the business interruption occurred?
COVID - 19 per se has not interrupted business it's the reaction of governments to it that has caused the problem.
There are countries such as Sweden and Japan that are carrying on as usual.
I have no comment to make on which country has the most appropriate approach other than to venture that Sweden and Japan illustrate that insurance companies, as ever given the nature of the beast, are seeking to evade their obligations by hiding behind COVID - 19. To the best of my knowledge, despite the presence of COVID - 19 in those countries too, business continues which suggests government action is the reason for the interruption.
@Rob7Lee without asking for too much PI, you in the London market?
There's a lot of talk going on at the moment regarding coverage. Hiscox are getting a lot of pressure on their commercial side but are refusing to budge. The whole thing is a very complex issue that I'm sure the media and government will all too happily lay the blame at evil insurers. When things settle down a bit it'll be very interesting to see the fall out as the whole market has been in a state of flux for a few years, no doubt this will clear out even more of the small players just leaving the big boys to tidy up.
@Rob7Lee without asking for too much PI, you in the London market?
There's a lot of talk going on at the moment regarding coverage. Hiscox are getting a lot of pressure on their commercial side but are refusing to budge. The whole thing is a very complex issue that I'm sure the media and government will all too happily lay the blame at evil insurers. When things settle down a bit it'll be very interesting to see the fall out as the whole market has been in a state of flux for a few years, no doubt this will clear out even more of the small players just leaving the big boys to tidy up.
I am yes, Hiscox are a little bit out on their own due to their policy wording, I think in the main the rest are what they are, some for sure covered it, some certainly didn't. I'm surprised at Hiscox to be honest who've always had that reputation of paying claims, i'm not an insurance lawyer but been in the game 30+ years and I just don't see how they'll get out of it.
Of course their exposure could be huge.......
The US thats more of an issue as the states retroactively change the law/goal posts, thats going to be interesting.
I agree with your last sentiment, I think a few more will fall by the wayside, it's what the industry is becoming, big is best......
Can't say it's the industry I joined all those years ago, i'm pretty jaded by the last 10 years, might be time for a change. I know the image insurers have to the outside world, but how many have made any money the past 5-10 years, not many!!
@Rob7Lee without asking for too much PI, you in the London market?
There's a lot of talk going on at the moment regarding coverage. Hiscox are getting a lot of pressure on their commercial side but are refusing to budge. The whole thing is a very complex issue that I'm sure the media and government will all too happily lay the blame at evil insurers. When things settle down a bit it'll be very interesting to see the fall out as the whole market has been in a state of flux for a few years, no doubt this will clear out even more of the small players just leaving the big boys to tidy up.
I am yes, Hiscox are a little bit out on their own due to their policy wording, I think in the main the rest are what they are, some for sure covered it, some certainly didn't. I'm surprised at Hiscox to be honest who've always had that reputation of paying claims, i'm not an insurance lawyer but been in the game 30+ years and I just don't see how they'll get out of it.
Of course their exposure could be huge.......
The US thats more of an issue as the states retroactively change the law/goal posts, thats going to be interesting.
I agree with your last sentiment, I think a few more will fall by the wayside, it's what the industry is becoming, big is best......
Can't say it's the industry I joined all those years ago, i'm pretty jaded by the last 10 years, might be time for a change. I know the image insurers have to the outside world, but how many have made any money the past 5-10 years, not many!!
Yeah I can only imagine what their exposure could be. Having been involved with our own early forecasts (and we don't have huge BI exposure) this year is not looking pretty. The US is a very interesting story given how each state could rule different outcomes. Not been in the industry as long as you but I certainly relate to your last paragraph.
@Rob7Lee without asking for too much PI, you in the London market?
There's a lot of talk going on at the moment regarding coverage. Hiscox are getting a lot of pressure on their commercial side but are refusing to budge. The whole thing is a very complex issue that I'm sure the media and government will all too happily lay the blame at evil insurers. When things settle down a bit it'll be very interesting to see the fall out as the whole market has been in a state of flux for a few years, no doubt this will clear out even more of the small players just leaving the big boys to tidy up.
I am yes, Hiscox are a little bit out on their own due to their policy wording, I think in the main the rest are what they are, some for sure covered it, some certainly didn't. I'm surprised at Hiscox to be honest who've always had that reputation of paying claims, i'm not an insurance lawyer but been in the game 30+ years and I just don't see how they'll get out of it.
Of course their exposure could be huge.......
The US thats more of an issue as the states retroactively change the law/goal posts, thats going to be interesting.
I agree with your last sentiment, I think a few more will fall by the wayside, it's what the industry is becoming, big is best......
Can't say it's the industry I joined all those years ago, i'm pretty jaded by the last 10 years, might be time for a change. I know the image insurers have to the outside world, but how many have made any money the past 5-10 years, not many!!
I started in the business in 1975. As an outsider these days I can see how it has really changed, though I am still working remotely for a London-based MGA.
Back to Hiscox and I think the issue of reinsurance is a major factor in their current stance. It's extremely doubtful that any reinsurance policy would respond and although we don't know what their exposure is they're running the whole risk.
To be fair it would seem mental to pay out to companies due a pandemic, when they’d made a choice not to take out pandemic cover.
I doubt an awful lot of businesses actively chose not to take it.
Do insurance companies decide which policies their customers are allowed then?
In a word yes, Insurers decide the policy wording.
A lot of business insurance is still bought through brokers, so depends on what the broker offered and what they had access to....... theres also a lot of the direct polices (such as direct line) which only give BI in the event of a physical damage loss so pandemic is not even offered/covered at all so the insured won't have chosen not to take it..
To be fair it would seem mental to pay out to companies due a pandemic, when they’d made a choice not to take out pandemic cover.
I doubt an awful lot of businesses actively chose not to take it.
Ignorance is bliss then? as its a choice you could have taken out there will be no goodwill gesture at all, no chance.
My point was that I doubt many (%) were offered it and chose not to take it. And how many small business when they went to buy their insurance last year thought 'i must remember to ask about Pandemic BI insurance'......
Learn something new everyday, I had assumed it would be in opt in, opt out kind of thing, much like my health insurance. Cheers Rob.
Comments
Insurance companies trying to wriggle out of their responsibilities.
theres a long list of diseases covered but Coronavirus isn’t on there yet
The main point of insurance and reinsurance and reinsurance is to provide resilience in times of stress.
i work for a primary insurer and a major reinsurer and that is the message we have been selling, admittedly not very profitably as the rates people are prepared to pay has been battered since the financial crisis.
None the less, these companies have reserves and can raise more, a bit like a mortgage holiday if there is an understanding that these will be used despite a lack of contractual obligation, hopefully the users of this service will remember and will pay a bit more to cover themselves in the future.
Apologies to those on here who earn their living in the industry.
@northstandsteve - You say your policy has a specific disease exclusion. This will probably apply to any Pandemic or Epidemic declared, so it sounds like it will be applied on your policy.
I would say generally, even without a specific exclusion, its unlikely BI losses for C-19 are covered under most policies.
Interruption by Civil Authority is a specific extension that large industrial companies buy. This is one of the few examples where BI cover is available where no property damage trigger is needed. However, even on a billion dollar policy, this would be sub-limited to 50M. It is hard to cover this element to full limit because it involves payment by insurers without accidental and fortuitous loss. Also aggregation issues come into play as any Civil Authority Order will affect multiple insureds.
Before people beat insurers to death, the only reason it works is the losses of the few are paid for by the many. For C-19, the worlds business has been interrupted. Insurance sector cannot pay for the downtown in GPD. I can also understand why policy holders may be disappointed that their policy doesn't cover BI resulting from a global lockdown.
There is a massive protection gap between what people pay premiums for and what they need in personal or joint extreme circumstances.
I am fortunate to work for a company that pays for death in service such that if I died (except by suicide) my mortgage would be paid off and my son would own my home outright and with his mum, and others be able to support his education.
That for me is a basic protection and loss of work through illness etc is more premiums, which I pay but not as much as I should.
Most insurers now look to pay out as quickly as possible and as well as possible unless they have a worry the claimant may be taking the piss.
However some policies will have an optional section for pandemic interruption, normally sub limited, most policyholders chose not to take this though. We've about 3,000 UK policies where we give £25k cover.
Our net loss will be in the region of 2-400m (USD) I suspect. Contract Frustration losses could be huge.
Not covered and not at all surprised.
Wish I had thought of this situation as a BCP - however not beating myself up for not doing so.
Had a mail from my travel insurers two weeks ago saying roughly “ Covid 19 is now a pandemic - you know that now. If you travel, it’s up to you, not covered by us”
Read it and thought fair enough. Easy to dig out insurers and we have all had the hump with our individual personal experiences.
Would be reticent to dig out insurers in a panademic though.
Ps. If I die and they do not pay out, they can fooking do one...
This is an issue for the government to sort out. They need to make sure that insurance companies take their share of the pain. I think in future i am only going to pay for the legal minimum insurance for everything as insurance companies rarely pay out and are the lowest of the low!!!
As of 5 March it is a notifiable disease.
There will be pay outs for Wimbledon, the Olympics etc etc as they took out specific event cancellation insurance. We write a $10m lines on most of the larger events such as these.
Who is he insured with, do you have the exact wording of the terms within the policy for Business interruption?
Your bog standard commercial policy tends to cover BI up to a level but only if is accompanied by a physical damage loss (i.e. fire, flood etc).
Some policies include cover for certain, specified, diseases forcing closure (I suspect this is what he may have in his policy and COVID 19 won't be specified).
Some Policies include cover for all diseases and forced closure (you may have read an action likely to happen against Hiscox refusing to pay).
I can't see it in the UK, but some of the US states are forcing insurers to pay even if they specifically exclude this cover, that'll rumble on for years through the courts I suspect.
https://www.bbc.co.uk/news/business-52291286
"Mr Woolard admitted that following conversations with insurers, it was clear that most business interruption policies held by small and medium-sized businesses only had basic cover which did not include pandemics and therefore insurers had no obligation to pay out in relation to Covid-19.
"While this may be disappointing for the policyholder, we see no reasonable grounds to intervene in such circumstances," he said."
A lot of business insurance is still bought through brokers, so depends on what the broker offered and what they had access to....... theres also a lot of the direct polices (such as direct line) which only give BI in the event of a physical damage loss so pandemic is not even offered/covered at all so the insured won't have chosen not to take it..
My point was that I doubt many (%) were offered it and chose not to take it. And how many small business when they went to buy their insurance last year thought 'i must remember to ask about Pandemic BI insurance'......
COVID - 19 per se has not interrupted business it's the reaction of governments to it that has caused the problem.
There are countries such as Sweden and Japan that are carrying on as usual.
I have no comment to make on which country has the most appropriate approach other than to venture that Sweden and Japan illustrate that insurance companies, as ever given the nature of the beast, are seeking to evade their obligations by hiding behind COVID - 19. To the best of my knowledge, despite the presence of COVID - 19 in those countries too, business continues which suggests government action is the reason for the interruption.
There's a lot of talk going on at the moment regarding coverage. Hiscox are getting a lot of pressure on their commercial side but are refusing to budge. The whole thing is a very complex issue that I'm sure the media and government will all too happily lay the blame at evil insurers. When things settle down a bit it'll be very interesting to see the fall out as the whole market has been in a state of flux for a few years, no doubt this will clear out even more of the small players just leaving the big boys to tidy up.
Of course their exposure could be huge.......
The US thats more of an issue as the states retroactively change the law/goal posts, thats going to be interesting.
I agree with your last sentiment, I think a few more will fall by the wayside, it's what the industry is becoming, big is best......
Can't say it's the industry I joined all those years ago, i'm pretty jaded by the last 10 years, might be time for a change. I know the image insurers have to the outside world, but how many have made any money the past 5-10 years, not many!!