The chief executive officer of Travelers Cos. Inc. on Tuesday accused trial lawyers of filing “frivolous lawsuits” for COVID-19 compensation as the property casualty insurer posted an $86 million charge in the first quarter for catastrophic losses related to the pandemic.
Lawyers are challenging insurance policies that exclude viruses and bacteria as reasons to exclude business interruption from coverage. Businesses have been shut for more than a month and are seeking financial relief from various sources, including government and insurance policies.
Insurers say they have not collected premiums for viruses and should not be required to retroactively reimburse businesses.
Alan D. Schnitzer, Travelers’s CEO, told investor analysts on a conference call that trial lawyers are “already actively soliciting plaintiffs for cases related to the pandemic.”
“We should all be concerned that many frivolous lawsuits will be brought and will undermine the nation’s recovery,” he said.
Travelers faces its first lawsuit over the coronavirus. Geragos & Geragos, a Los Angeles law firm, sued Travelers earlier this month for refusing to cover unpaid rent and other related expenses related to a halt in the law firm’s tenants’ use of offices after California ordered businesses shut in March.
“Any effort by Travelers to deny the reality that the coronavirus causes physical loss and damage would constitute a false and potentially fraudulent misrepresentation that could endanger policyholders, such as plaintiff and the public," Geragos & Geragos said.
Travelers responded in federal court in Los Angeles, saying the law firm “did not purchase insurance for the losses that G&G now claims.”
“Even without reference to their exclusions, the policies require ‘direct physical loss or damage’ to property, and the presence or suspected presence of a virus does not constitute the requisite “direct physical loss or damage,” the insurer said.
Travelers reported Tuesday it paid out $333 million in catastrophic losses, up from $193 million in the first quarter of 2019, due primarily to tornadoes in Tennessee and other wind storms and winter storms in the U.S.
The insurer posted net charges of $86 million related to COVID-19 and related economic conditions. In addition, the insurer said it posted net investment losses in this quarter of $98 million, driven by the impact on its investments caused by disruptions in financial markets.
Profit in the quarter that ended March 31 was $600 million, or $2.33 per share, falling short of an estimate of $2.88 by Zacks Investment Research. Revenue of $7.9 billion was up 3% from the 1st quarter of 2019 and net income was down 25%.
Shares of Travelers were up about 2% in afternoon trading, to $103.68.
Stephen Singer can be reached at [email protected].
(c)2020 The Hartford Courant (Hartford, Conn.)
Visit The Hartford Courant (Hartford, Conn.) at www.courant.com
Distributed by Tribune Content Agency, LLC.