Are we Covid covered ?

Wednesday 22nd April 2020

Whenever it’s all over, it won’t be. Never mind the prospect of a   V or W or “Nike Whoosh” recession, or a  “Great Depression 2” .

As businesses go bust, people lose jobs and incomes, debt defaults surge, one of the major sectors of the financial industry will face some serious legal action, which will grind on for years.

The financial watchdog has ordered that during the current crisis, insurance companies pay out claims to firms or explain themselves. But new research suggests that insurance cover is being reduced because of the Coronavirus pandemic,particularly over business interruption claims.

Bruce Hepburn, CEO of commercial insurance experts  Mactavish told The Business Breakfast ( that Covid 19 is often not covered specifically in the ‘extensions’ to business insurance policies – which only refer to ‘notifiable’ diseases. Covid 19 was declared a ‘notifiable’ disease at 6 15pm on March 5th.

Hepburn told me :’ The problem is that 20% of SMEs and 25% of FTSE 350 companies renew their insurance in March. Insurance companies rushed out a whole raft of exclusions to remove any vestiges of cover.’

That’s the first complication, and during the SARS crisis it was six weeks after the first casualties that the disease became notifiable. A landmark judgement in the Court of Final Appeal in Hong Kong said ‘as cover was not retrospective, losses arising from SARS were only covered once it officially became a notifiable disease in Hong Kong, at which point it became an insured peril and triggered the policy.’

Hepburn was keen to point out that he doesn’t think that insurance companies should be forced to pay out if they haven’t received the right premiums, but added “ the insurance industry has  a poor record on the legal action it takes on claims.’

‘It’s  ( also ) a mis-selling issue. If people have been told  that they have infectious disease cover maybe (they) should be looking at suing their broker.’

No doubt teams of lawyers are slavering at the prospect. From a safe distance, of course.


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