Insurance Information Institute: Important Statements From Triple-I on Business Interruption Litigation Filings

NEW YORK, April 30 -- The Insurance Information Institute issued the following news release:

Statement by Triple-I CEO Sean Kevelighan

Global pandemic risks are uninsurable. Given the unpredictability and unimaginable potential for worldwide losses, insurance is simply unable to cover a global pandemic. This concept is made expressly clear in standard U.S. business interruption policies, which are reviewed and supported by state insurance regulators. Commercial property insurance policies which include business interruption coverage require the losses to be caused by direct physical damage to the business's property, and the threat of a virus is generally not considered physical damage to property.

A campaign led by the world's richest chefs and a celebrity attorney to retroactively rewrite business interruption policies is not only unconstitutional (Article I), but it would imperil the insurance industry's ability to pay covered insurance claims filed by homeowners, drivers, and injured workers.

Retroactive business interruption payouts would bankrupt insurers. A recent Insurance Information Institute (Triple-I) economic analysis shows it would only take a matter of months to put serious strain on the industry's financial resources at a time it needs those monies for major natural disasters that insurance policies cover, such as tornadoes, hurricanes, and wildfires.

Federally backed government solutions are available - and more are expected. We hope the frivolous legal actions of a few will not distract from the urgent needs of American small businesses. The federal government is the only entity with the financial resources available to help businesses impacted by the government-mandated quarantines.

More than 40 trade organizations - including those representing insurers, restaurants and other hospitality industries - are also supporting a proposed, federally-financed program known as the COVID-19 Business and Employee Continuity and Recovery Fund.

Insurance is a critical part of what's keeping the American economy going right now. Healthcare and first responders and all "essential businesses" have insurance backing them in the form of workers compensation and commercial auto insurance. Restaurants - some of whom are staying open for take-out and delivery - are covered for their delivery services as well as other covered events, such as a fire or property damage caused by vandalism.

This is a time to come together and work toward recovering from this unimaginable and uninsurable catastrophe. The insurance industry is stepping up for Americans, with the likes of $10.5 billion in personal auto insurance premium relief, $220 million in charitable donations, and even more by keeping nearly two million Americans employed so insurance customers will be covered, and their claims handled, when other disasters strike.

Statement by Triple-I Non-Resident Scholar and Law School Professor Michael Menapace

"Insurers evaluate individual business interruption claims according to specific policy terms and conditions and the facts known at the time of review. The current government shut-down orders do not trigger the vast majority of standard business interruption policies because those orders do not qualify as direct physical loss to property - a requirement under the policies. Moreover, most policies expressly exclude losses incurred due either to a virus or bacteria because pandemics interrupt nearly all businesses everywhere, all at the same time. The federal government is the only entity with the financial resources to help businesses during a widespread global pandemic," said Michael Menapace, a Connecticut-based insurance attorney, counselor, and Quinnipiac University School of Law School professor.