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Weird, strange and bizarre have been common parlance since the lockdown and for me it’s odd to watch so much TV...

…My kids call me ‘boring’ when I head for the discovery channels, whereas I think it fairer that I have an inquisitive nature. However, despite an interest in most subjects I would gladly have never heard of Wuhan, be happy to mispronounce furlough as a racing distance and wish a zoom was still just a lolly.

But as the Government keep saying this is ‘unprecedented’ or ‘unchartered territory’ and insurance, no doubt like many industries, has changed so quickly. It is not just the working from home: working remotely and the use of technology such as video footage for claims was already fairly widespread, but it is the speed that the industry has reacted by adapting policy cover to the enforced changes resulting from the lockdown. That has been a pleasant surprise.

Another surprise has been an insurer (Admiral), giving a £25 refund to their policyholders (without being asked) to reflect lower car use and fewer claims. Inevitably that wasn’t enough for some and perhaps it was just a PR stunt but one thing that hasn’t changed is insurers getting flak.

Despite general acceptance that a worldwide pandemic is too big for insurers, the few who didn’t fully exclude the pandemic from their Business Interruption wordings haven’t covered themselves in glory by delaying decisions as to whether cover has been triggered. The industry ombudsman is already involved, and some cases may end up in court with one potential class action already in the pipeline.
In America, there is also already legal action with a casino chain arguing that COVID-19 should be treated as property damage thus triggering Business Interruption cover. If successful, some Lloyds Syndicates in London will be exposed to claims.

But of greater concern to the industry is the threat of retroactive legislation to override policy exclusions and mandate insurers to pay COVID-19 losses where Business Interruption cover is in force. New Jersey were the first to propose a bill and other States may follow, although Insurers have warned that such draconian action could mean that the industry implodes.

Trump has unsurprisingly waded into the argument with the view that insurers should pay and is perhaps typical of politicians hoping that insurers rather than government end up ‘carrying the can’. Nicola Sturgeon has already said as much in Scotland and many of those in the UK parliament obviously hoped that by making the disease notifiable, they could pass at least some of the buck onto insurers.

However, it seems inconceivable that the UK Government could follow the American lead.

Looking ahead, the insurance industry has gone on the PR offensive by setting up a steering group to develop a Government backed insurance solution for future pandemics along the lines of PoolRe for terrorism, although the Government may first have to act as a reinsurer for credit insurers. Credit insurance protects companies from bad debts if a supplier goes bust and, in some sectors, it is impossible to trade without it. However, credit insurers are set to take a big hit from COVID-19 and with the ongoing economic uncertainty are reducing or withdrawing cover, hence the potential need for the Government to step in.

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