By: Sally McPhee
New York State legislators in Albany want to squeeze insurance firms into paying small businesses for losses incurred due to the Coronavirus pandemic.
A bill was introduced by Assemblyman Robert Carroll that suggests the entire insurance business is responsible for business interruption insurance claims that have been denied to those small businesses due to legalistic contractual minutiae.
“Carroll is targeting the clauses that exclude liability for traditional business interruption induced by a virus—ones typically reserved for e-coli on food—for the coronavirus,” reported Crain’s New York Business.
“It is within the state’s power to say that we are retroactively finding these clauses unconscionable and null and void, starting on day one of the emergency and running through when the emergency is over,” Carroll told Crain’s. “Furthermore, we are saying it’s for businesses under 250 employees, legit small businesses that don’t have bargaining power.”
Experts have been warning all along that commercial insurers have been braced for a pair of major threats. “The first is millions of claims by small businesses that want their insurers to cover their losses from COVID-19 lockdowns,” Reuters reported. “The industry… is of the view that the vast majority of those claims are either unwarranted under the language of their policies or specifically excluded because of exceptions that insurers began to impose in 2006.”
Another risk, the piece pointed out, is from “state legislatures considering laws to force the industry to provide retroactive coverage to policyholders, regardless of the language of their insurance contracts. Lawmakers in seven states, including hard-hit New York, New Jersey and Louisiana, have introduced such bills, though no law has yet been enacted.”
Chubb Ltd. Chief Executive Officer Evan Greenberg reportedly said during an earnings call that the fallout of the pandemic could prove a permanent game changer for the insurance industry.
“This event will be the largest event in insurance history,” Greenberg said, according to Bloomberg News. Wednesday on an earnings call discussing Chubb’s first-quarter results. The virus and its ripple effects will impact both the asset side and the liability side of the balance sheet, he said.
“We’re in an unprecedented moment of historic proportions,” Greenberg noted during the call. “None of us living today has experienced an event of this nature or magnitude. It is at once surreal and catastrophic. As a country, we will manage through and heal both our society and economy, and it will take time.”
Insurance companies find themselves challenged by the likelihood of lawmakers in a variety of states putting together bills to forces them to cut checks for business interruption losses.
[…] Robert Carroll has introduced a bill in New York which targets clauses in insurance policies that exclude traditional losses caused by […]