Some insurance products are designed to provide explicit coverage for business interruption resulting from an infectious disease outbreak, either as a stand-alone special policy or as confirmation of a policyholder`s existing coverage. In 2018, for example, specific coverage was provided for financial losses due to outbreaks, epidemics or pandemics (Marsh, 2020[8]), although almost no sampling took place (Collins, 2020[9]). A group of U.S. insurance associations (American Property Casualty Insurance Association (APCIA), National Association of Mutual Insurance Companies (NAMIC) and Independent Insurance Agents and Brokers of America (Big I)) have proposed the establishment of a business continuity protection program that would provide federal compensation of up to 80% of certain types of operating costs (including payroll, , employee benefits and other operating expenses). up to three months after an emergency is declared. Companies should purchase this coverage in advance and certify that: (a) the proceeds of compensation will be used to retain employees and pay for the necessary operating costs; and (b) that the Company will implement all applicable federal health and safety guidelines during the health emergency. Protection could be acquired on a voluntary basis by any corporation incorporated in the United States. The private sector would not assume any of the risks of a future pandemic and would be fully supported by the U.S. federal government (NAMIC, APCIA and Big I, 2020[70]) (Hatler, Mihocik and Roman, 2020[81]). For example, a single pool covering a country`s entire real estate portfolio would create a more diversified risk portfolio than any insurance company could do alone (without a 100% market share).16 An insurance company (or pool) with a higher degree of risk diversification has lower (if not identical) economic and (often regulatory) capital requirements and may therefore offer lower prices. The Storm Council is a public body that compensates damages financed by a fire insurance tax. Some of these programs are broad in spectrum and cover multiple risks and lines of insurance. For example, the Consorcio de Compensación de Seguros (CCS) in Spain provides insurance coverage for residential and commercial real estate, motor vehicles, and accidents and illnesses against a wide range of natural and man-made hazards.
Others focus on specific (high-risk) risks (e.g., earthquakes in Japan or wind in Florida), specific business areas (e.g., residential properties for natural hazards or commercial real estate in case of terrorism), or even a specific exposed segment (e.g., flood-prone residential properties in the UK). [99] Heidtke, D. (2020), Congress Proposals Bill for Coronavirus Business Loss Insurance Coverage, Duane Morris Insurance Law, blogs.duanemorris.com/insurancelaw/2020/04/16/congress-proposes-bill-for-coronavirus-business-interruption-insurance-coverage/#page=1 (accessed April 21, 2020). In the United Kingdom, the Financial Conduct Authority (FCA) has taken the unprecedented step of seeking clarification from the courts on specific areas of potential business interruption coverage1 litigation to speed up resolution and reduce the need for lengthy litigation between insurers and their policyholders (FCA, 2020[31]). In September 2020, a High Court judgment was issued, with elements of this judgment appealing to the Supreme Court, which issued a judgment in January 2021. The courts found that many of the 21 contract formulations reviewed included business interruption coverage through the interpretation of sick leave clauses (which provide coverage in the event of an outbreak of a reportable illness near the insured) and coverage to prevent access, and that trend clauses2 (generally) cannot be applied to reduce the amount of claims paid to policyholders. (Lewis et al., 2021[33]). Following the Supreme Court decision, the FCA issued a Dear CEO letter in which it expects insurers to pay claims under the affected policies as soon as possible (FCA, 2021[34]). The absence (or uncertainty about) coverage has led to (and will continue to cause) a large number of disputes between insurers and their policyholders, which will likely take months (if not years) to resolve. For example, over 1,500 COVID-19-related insurance claims have reportedly been filed in the United States (as of February 2020) (Baker, 2021[29]), early results of which suggest different judicial interpretations of key issues and limited potential for consolidation of proceedings (Covington, 2020[30]) (although many of these cases, which were the subject of a motion to dismiss the insurer, have been dismissed, particularly in federal courts (Baker, 2021[29])). Some legislators, insurance regulators (in particular market conduct and consumer protection authorities) and insurance associations are taking steps to promote more effective resolution of such disputes, including by submitting test cases to clarify the interpretation of commonly used contract language (see Box 4).
[37] FSCA (2020), FSCA`s most recent position on business interruption insurance, Financial Sector Conduct Authority. In early July, a major U.S. property and casualty insurer (Chubb) released a proposal to establish a pandemic-related business interruption program that includes facilities for small, medium and large businesses. For small businesses, the program would provide for a fixed payment based on a multiple of government-reported pandemic and lockdown labor costs with a first layer of losses (beyond a deductible and up to $250 billion) co-insured by insurance companies and the state (with the industry`s share increasing over time) and a $500 billion surplus layer. which is funded by the government. Policyholders would only have to pay a premium to cover the industry`s share of the losses, which would reduce the cost of this insurance. Businesses should opt out of purchasing this coverage, confirming that they would not have access to federal business interruption coverage or pandemic assistance programs. For medium and large businesses, business interruption coverage could be purchased on a voluntary basis from private insurers who would transfer a portion of the risk (and premium) to a government reinsurer (Pandemic Re). Coverage would be capped at $50 million per policy, and industry retention would initially be capped at $15 billion and increase over time (Chubb, 2020[83]).
[7] Australian Bureau of Statistics (nd), Revenue impacts of COVID-19, Business Indicators, Business Impacts of COVID-19 (mai 2020), www.abs.gov.au/statistics/economy/business-indicators/business-indicators-business-impacts-covid-19/may-2020 (consulté le 9 novembre 2020). [74] Ladbury, A. (2020), « Français pandemic insurance scheme plans near completion: AMRAE », Commercial Risk, www.commercialriskonline.com/french-state-and-insurers-moving-close-to-creation-of-pandemic-scheme/ (consulté le 3 juillet 2020). [42] Carrigy, C. et J. Grogan (2020), Central Bank of Ireland Publish Supervisory Framework for COVID-19-related Business Loss Insurance Claims, William Fry, www.williamfry.com/newsandinsights/publications-article/2020/08/06/central-bank-of-ireland-publishes-supervisory-framework-for-covid-19-related-business-interruption-insurance-claims (consulté le 2 septembre 2020). The U.S. Bureau of Insurance Services has developed two optional notices for commercial real estate insurance policies applicable to business interruption resulting from COVID-19-related business closures in February 2020, although it is too early to determine whether insurers will attempt to provide this coverage (Barlow, 2020[10]). There are also some commercial insurance policies that explicitly include pandemics as a covered risk in certain markets (e.g., a property and liability insurance policy tailored to dental offices in Canada) (O`Hara, 2020[11]).