Some insurance companies in the US are hoping the Federal Government will help offload their riskiest policies. A report by Reuters details that lobbyists associated with some insurance companies are in talks with lawmakers and regulators to address losses from pandemic or other force majeure causes.
Tom Nowland, an Orange County, California business litigation attorney that represents and defends companies, weighed in. “Currently, the Insurance industry is looking at a string of recently filed lawsuits that are anticipated to continue into the next few years as businesses seek compensation for their losses. The issue is, there is a lot of grey area and fine print under business interruption clauses in business insurance policies. I would not be surprised at all to see a lot of desperate companies attempting to force their insurance companies to cover their losses. Insurance companies, on the other hand, may not be able to pay all losses to all businesses. They face years of litigation and a public relations nightmare. It could even be a political quandary for them. If they can succeed in getting the federal government to cover those liabilities, it would allow them to side-step this trouble.”
On the issue of whether insurance companies would be able to pay all new claims related to pandemic losses, most insurance companies are compliant with insurance regulations that require insurers to keep a surplus. The numbers are not clear as to whether that surplus would be enough. Further, should there be another disaster requiring high payouts, the insurance industry could see itself in real danger. Prolonged pandemic waves with mutating viruses, new outbreaks, wildfires, floods, and damaging weather such as hurricanes could place insurers’ books in danger.
When talking about the Federal Government stepping into the insurance arena to cover staggering amounts of money, there is a small precedent. In the wake of the September 11th terrorist attacks, the government did supplement and support some specific terrorism policies.
Nowland Law recommends that companies with potential claims against their insurers contact competent legal counsel to explore their options.