First of all we need to make clear that we are not experts on this outbreak in any way shape or form and after reading this information you may still have more questions than answers.
As we write this we are very much in danger of our business going under and we fully empathise with all of those in businesses who are in exactly the same situation as us.
We operate predominantly insuring businesses and property and the big question in these areas apart from the obvious of direct health threats is, will the economy of each country that Covid-19 has touched survive? It is the first question that cannot be answered at this stage.
When we talk about insuring businesses we define this to include property, because this in turn includes businesses such as guest houses, hotels and some shops, bars and some bigger businesses who also own the buildings that they operate from. We include landlords that own buildings too. We class them as business owners too for them this is their livelihood. We are also well aware that the Covid -19 outbreak affects the potential income of every business which could include a single fisherman or taxi driver for example.
The cover required to include every type of business in one country being involved in a catastrophe at the same time is astronomical and there are a limited amount of insurers.
Let us take 9-11 as an example. In this situation the World Trade Centre was insured, with all the liabilities required but it was also re-insured to other insurance companies so when that tragic disaster occurred, which is one of the biggest single insurance claims of all time, the extensive liabilities involved would be covered, although I am not sure if all the money involved came from just insurers as big as that claim was.
This has maybe put things into context. That was one situation in one part, of one country, it occurred over only a short space of time although the payments continued for years to come.
The Coronavirus is a global disease and some are taking it very lightly because it is not affecting their day to day situation yet and others are extremely worried and of course many globally have now lost their lives to it.
If you have a business insurance that covers Business Interruption or a property insurance that covers loss of rent, you may find that the effects of Covid -19 are excluded because your policy lists diseases that are covered and Covid-19 isn’t one of them. You will most likely find other diseases such as Cholera, Smallpox and other previously known diseases there. In fact ever since the SARS outbreak insurers have had to be careful how they word their policies.
Some bigger companies have policies which mention that disease in general is covered but there will be a limit of indemnity usually around three months or the amount available to claim will be limited to perhaps £50k and the cover will normally begin from when the disease was activated as notifiable in law. In the case of the UK Covid-19 was notifiable from 05/03/2020.
The majority of businesses have no insurance cover at all for this outbreak irrespective of whether the government officially tells them to close or not. Recently huge insurers such as Aviva, AXA, Allianz to name but a few have stated they will not cover the effects of this outbreak. Zurich does not have any wording at all regarding disease in their all risks policies. The insurers that do have an element of cover often specify that you may be able to claim but only if an incident happens on the premises.
You may blame insurance companies at this point but if we think back to the situation of 9-11. The insurance company that insured the twin towers had to spread out their risk with other insurers or, they had to lay the risk off as is said in the gambling industry to ensure the total level of cover required was in place.
It is more likely now with this situation unfolding that even the insurance companies could run out of money eventually as the threat of the Coronavirus epidemic is exponentially greater and the exposure may well last for a much longer time. Although we do feel insurers could possibly offer some goodwill for a while.
Ultimately in this situation where the risk is vast, unpredictable and could effectively continue for many days or months, even insurance companies could eventually go bust and only the Government will have the ability and financial resources to keep businesses, property and the rest of the country afloat.
Insurance policies are designed mainly to cover a few businesses at one time having difficulties in obtaining income due to an insured peril occurring such as fire, theft, storm, flood, lightning, impact etc. If everyone claims at once that is an immense strain both financially and on their resources.
Disease extensions are non – standard and are put in as an afterthought and are usually very limited if covering anything at all. This is mainly because insurance companies know it is impossible for them to continue to cover the risk in the long run. We are not defending them and we always stand with our clients, but where we sit in the middle we can see both sides.
This does not particularly help your business but as we have written this, the Government have started to put measures in place to help business and property owners. We think also that these measures ongoing will have to go much further for businesses and it is only the beginning. We also feel for those who are vulnerable and for the elderly who are affected directly by this terrible affliction.
If you have any questions which we said at the start we think you might, mainly regarding insurance. You can always contact us and we will do our very best to answer but please remember the word unprecedented seems to be extremely popular at the moment.