Evan Greenberg warns against ”self-inflicted harm from government attempts to force insurers to retroactively pay uncovered business interruption claims”
Chubb chief executive officer Evan Greenberg has warned US policymakers against pushing insurers to pay out for some uncovered business interruption losses. In the company’s first quarter earnings statement, he said:
“As the US gains better control over the virus and we look forward to reopening the economy, the ability to test, digitally trace and isolate is fundamental to suppressing the spread of the virus while returning to more normal economic and social activity.”
”It is also important at this time that we do not add unnecessarily to the great uncertainty we are already experiencing. To that end, we should prevent self-inflicted harm from government attempts to force insurers to retroactively pay uncovered business interruption claims, which is simply unconstitutional.”
The coronavirus pandemic has stirred up debate by the industry and its stakeholders over the fact the majoirty of business interruption policies are not designed to cover pandemics.
Speaking to StrategicRISK, Airmic CEO John Ludlow said BI was a policy which had traditionally been designed to pay out based on physical losses, but that it did not reflect the modern world.
“We need to look at business interruption because businesses have moved on,” he explained. “They’ve moved from a physical presence to having intangible assets and traditional BI is based on and hooked on to property insurance.”
“We need to revisit business interruption insurance because it is not particularly fit for purpose anymore and it’s hasn’t been for a while. It’s just yesterday’s policy and you can buy little extensions but they all have different wordings in, and so insurers are terrified because they don’t know what they’ve covered and the clients don’t know either.”
In the UK, Hiscox is among a group of six insurers that have been threatened with legal action for rejecting BI claims based on losses connected to the COVID-19 lockdown.
Meanwhile, in the US, there are several pending legislative proposals that could require business interruption insurers to cover small businesses’ losses from COVID-19—and then to require the rest of the insurance industry to pay into a fund to reimburse those carriers. Lawyers at Mayer Brown say such moves are subject to “serious constitutional question”.
“The coronavirus is delivering a severe blow to the global economy. How long and how deep is unknown,” said Greenberg. “It will have a major impact on the global insurance industry in terms of both losses and revenue.”
“Insurance has an important role to play in society and in the economy, and at Chubb we are doing our job to support our customers, employees and business partners, all of whom rely on us. We are operating day to day at a very high level globally and I am confident Chubb will weather this difficult time and emerge stronger.”