Covid-19 and Insurance Claims
No ordinary Status Red Alert
In 2018 we had the Beast from the East – a severe weather event that brought the country to its knees for about a week in March 2018 as heavy snowfalls and temperatures as low as -14C engulfed the country. There were shortages of bread. Schools and businesses closed as a type of self-imposed social isolation occurred – but that only lasted a few days.
Since then we have had several Status Red and Status Orange weather alerts which required a battening down of the hatches and disruption to businesses and normal life – but only for one day at a time.
Now in March 2020 we are dealing with an altogether different kind of “Beast From the East”. The Coronavirus or Covid-19 as it is formally known is a flu like virus that started in China in late December2019 and has since spread to over 140 countries. It is highly contagious, with no known cure (other than the body’s own immune system) and no vaccination. At the time of writing it has infected more than 170,000 people and killed more than 6,500 people worldwide. On Wednesday 11th March 2020 it was declared by the World Health Organisation as a pandemic.
By Thursday 12th March all schools, universities and childcare facilities in Ireland had closed. By Sunday 15th March all pubs and clubs had closed. The aviation industry throughout Europe is practically shut down as travel is being curtailed and various countries are closing their borders.
People with any symptoms of cough or fever are being asked to self-isolate to avoid spreading the virus. Severe cases are having difficulty breathing and require intensive care or to be put on ventilators. In Italy the virus has already been identified in over 24,000 people and been responsible for almost 2,000 deaths. The medical facilities are being overwhelmed and cannot treat everyone presenting.
Whilst thousands of jobs have already been lost in Ireland, many workers who could work from home are already doing so.
The insurance industry is resilient and will overcome this set-back. There will undoubtedly be serious economic implications. Similar to the financial crash in 2008 there will be a time-lag before the full effects are felt in the insurance sector. If businesses fail there will be fewer policies renewed in the coming months and as a result fewer claims in the coming year or two. If individuals become unemployed they may not be able to afford to renew their home insurance or will seek once again to reduce sums insured or restrict policy coverage.
Individuals and businesses have insurance cover now, and losses will continue to occur resulting in claims albeit at possibly different rates e.g. there will be fewer workplace incidents and motor accidents but possibly more home incidents as more time is spent at home. Fires and water leaks will continue to occur and policyholders will need help and support to sort it out. Most Insurers and Loss Adjusting firms are operating remotely. However, there will likely be difficulties getting through or getting responses to queries. We do not know yet if there will be delays in getting settlement cheques issued. For now it is “keep calm, and carry on”.
Business Interruption Claims
Some business owners are asking if they can claim for business interruption losses as a result of having to close. Unfortunately for the most part the answer is “no” because there has been no material damage or the operation of an insured peril. In some commercial policies there is an extension under the Business Interruption cover for ‘infectious diseases’. However, there is often a requirement for the closure to be as a result of an incident occurring on the premises i.e. to a staff member or a customer. In other policies the cover is only for specified infectious diseases, and unfortunately Covid 19 is a new virus and therefore not listed in policies. Some policy wordings may have some cover up to specified limits in the policy when a business is forced to close as a result of a ‘notifiable disease’. This may be of some benefit to affected business owners who have been ordered to close by the authorities, as the Covid 19 virus is a ‘notifiable disease’.
Keep Calm and Carry On
All of Balcombes Loss Assessors are capable of working from home. We deal with property damage and business interruption insurance claims. We are used to working in relative isolation as we assess damage and compile claim details. Our interactions with clients are usually on a one-to-one meeting at the risk address and meeting with the appointed loss adjuster to agree the scope of the loss and damage. We believe we can continue to provide this service by taking all reasonable precautions recommended by the HSE. We will check with potential clients that they have no symptoms and have not been to affected areas, or in contact with confirmed cases in the past 14 days. By avoiding close contact e.g. hand-shakes, exercising good cough/sneeze etiquette and regular hand washing, and the use of hand-sanitizer we can continue to provide assistance to clients who need help processing their claim with their insurer.
Hopefully this temporary effective shut-down of the country will be short-lived, and the virus numbers will peak quickly and then decline, signalling the end of the risk to health and resumption of normal economic activity. Business owners are resilient people and will do all they can to limit the impact on their business, employees and customers and will seek to ramp up as quickly afterwards as possible. Heavily indebted businesses will undoubtedly not survive.
We are in uncharted territory and have never in living memory witnessed such a significant global disruption emergency. It makes the original Beast From the East look like a pussycat.