Fact Sheet Examines Business Interruption Insurance and Pandemics

A businessman on stairs looking at a hole that is breaking in the staircase

April 16, 2020 |

A businessman on stairs looking at a hole that is breaking in the staircase

The Insurance Information Institute (Triple-I) has released a fact sheet on "Understanding Business Interruption Insurance and Pandemics."

"Business interruption policies generally require the losses to be caused by direct physical damage to the business's property," Sean Kevelighan, CEO of the Triple-I said in a statement. "For this reason, the deadly tornadoes the United States incurred this week will likely generate many covered business interruption claims."

The Triple-I's fact sheet addresses four key points.

  • Global pandemic risks are uninsurable by private insurers, and only the federal government has the financial resources to cover them.
  • Standard business interruption policies clearly list "virus and bacteria" exclusions.
  • Retroactive business interruption policy payouts related to the COVID-19 pandemic would bankrupt insurers, costing the industry nationwide at least $250 billion a month.
  • Insurer financial stability is needed so that the industry can pay its covered claims, such as those caused by tornadoes, hurricanes, and wildfires.

"In these challenging times, it is important to look forward toward government-backed solutions to help businesses withstand and eventually reopen," said Mr. Kevelighan. "COVID-19 is now impacting every state in the Union at the same time, and only the government has the financial wherewithal to provide assistance. Any attempts to look back at requiring an insurer to pay for losses it never insured would cause irreparable harm to the industry."

The fact sheet can be found at the Triple-I website.

April 16, 2020