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rfields5421
Topic Author
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Pandemic Risks Insurance

Thu Jul 02, 2020 4:13 pm

Saw an article today that NASCAR in the US, along with other sports leagues and the movie industry are trying to get the US Congress to change some laws to make such risks insurable.

Those industries have suffered massive losses, along with many other industries/ companies. I see several closed Mom and Pop businesses permanently closed and for sale where ever we travel. I've sure the same thing is occurring in other countries across the world.

My questions are:

1) What insurance company could evaluate such a risks, and issue a policy?

2) Surely such insurance would not be affordable?

3) The call is for the government to provide some assistance/ backing for such insurance. I think this is a very bad idea.
Last edited by SQ22 on Thu Jul 02, 2020 4:15 pm, edited 1 time in total.
Reason: Typo fixed
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Tugger
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Re: Pandemic Risks Insurance

Thu Jul 02, 2020 4:40 pm

Part of the issue is how insurance companies cherry pick and restrict coverages to minimize the risk of a payout or minimize the payout itself. And since it is an industry-wide practice, there is little to no ability for customers to correct this through market action. So for that you then need government to step in and assist. It basically flips the equation and makes the insurance companies have to choose and either participate with the expanded conditions/coverage or get out and loose the business and profit potential. It is their choice if they want the business.

If it were completely left to insurance companies then they would write terms allowing them pay out next to nothing. The most important thing government does is enforce its will, the will of the people, the public that votes and empowers that government, upon elements such as business, that individuals alone cannot affect.

I will note this is being done successfully in California. The insurance commissioner (when he is not taking donations/bribes from the industry) has instituted several rules (some passed by public vote, some by the legislature) requiring certain expanded or levels of coverage for any insurance company that wants to participate in California's insurance market. Some companies have dropped out but there is still a good selection and competition.

So as with many things it can be good and/or bad, depending on how it is implemented.

Tugg
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Okie
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Re: Pandemic Risks Insurance

Thu Jul 02, 2020 5:20 pm

rfields5421 wrote:
My questions are:

1) What insurance company could evaluate such a risks, and issue a policy?

2) Surely such insurance would not be affordable?

3) The call is for the government to provide some assistance/ backing for such insurance. I think this is a very bad idea.


1. Any business that is licensed to do business in that state. If there was a chance to make a profitable return and the demand was high enough.

2. There is loss of business/disruption insurance on the market now but does not cover pandemics as far as I know. So if there is enough demand then you could buy it.

3. I think that only Florida backs homeowners insurance companies for amount of losses from hurricanes. That happened after no company would write a homeowner/business policy in Florida probably around 1992 after hurricane Andrew I believe.

One of my next door neighbors at one time worked for an insurance company. They insured all kinds of things but not homes, automobiles or life insurance.
He told me the process he went through the month before to figure the risk to insure a satellite launch. Interesting stuff I would say.
He indicated that it was easier to deal with a couple clients a month than thousands of homeowner, automobile and life insurance customers.

Okie
 
anrec80
Posts: 2759
Joined: Mon Jan 10, 2011 7:50 am

Re: Pandemic Risks Insurance

Fri Jul 03, 2020 6:49 pm

rfields5421 wrote:
Saw an article today that NASCAR in the US, along with other sports leagues and the movie industry are trying to get the US Congress to change some laws to make such risks insurable.

1) What insurance company could evaluate such a risks, and issue a policy?

2) Surely such insurance would not be affordable?

3) The call is for the government to provide some assistance/ backing for such insurance. I think this is a very bad idea.


Insurance wise - Lloyd’s of London is known to be insuring pretty much everything. Will it affordable - that’s a different story.
 
rfields5421
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Re: Pandemic Risks Insurance

Sat Jul 04, 2020 4:29 pm

I've always considered insurance as basically a bet you make that something bad will happen. And the insurance company bets that you will pay them enough money over time to cover the costs of paying up when something bad does happen.

I know my fully paid whole-life insurance policies worked out that way.

A couple auto insurance policies turned out to be money losers for the insurance company, but the hassle of dealing with damaged, destroyed cars, and injuries was much worse than the premiums.
Not all who wander are lost.
 
frmrCapCadet
Posts: 4102
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Re: Pandemic Risks Insurance

Sat Jul 04, 2020 5:25 pm

It is not likely that any insurance company in the world could absorb the hit that economies are facing now. I am not sure how the economics of insurance companies work, but here is a list of (non-banking?) assets of the largest companies. The US alone is facing $trillions of losses.

https://en.wikipedia.org/wiki/List_of_l ... _companies
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Aesma
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Re: Pandemic Risks Insurance

Sat Jul 04, 2020 8:22 pm

In France you could get epidemic/pandemic insurance before. Most companies didn't take it.

A restaurant owner has sued his insurance company and won, claiming he should have been covered, others are following suit, we'll see how that goes.

The French government has already pledged some help to insurance companies, in exchange for them to extend the help to their clients.
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c933103
Posts: 4156
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Re: Pandemic Risks Insurance

Sat Jul 04, 2020 8:35 pm

Tugger wrote:
Part of the issue is how insurance companies cherry pick and restrict coverages to minimize the risk of a payout or minimize the payout itself. And since it is an industry-wide practice, there is little to no ability for customers to correct this through market action. So for that you then need government to step in and assist. It basically flips the equation and makes the insurance companies have to choose and either participate with the expanded conditions/coverage or get out and loose the business and profit potential. It is their choice if they want the business.

If it were completely left to insurance companies then they would write terms allowing them pay out next to nothing. The most important thing government does is enforce its will, the will of the people, the public that votes and empowers that government, upon elements such as business, that individuals alone cannot affect.

I will note this is being done successfully in California. The insurance commissioner (when he is not taking donations/bribes from the industry) has instituted several rules (some passed by public vote, some by the legislature) requiring certain expanded or levels of coverage for any insurance company that wants to participate in California's insurance market. Some companies have dropped out but there is still a good selection and competition.

So as with many things it can be good and/or bad, depending on how it is implemented.

Tugg

I thought that mostly happens with retail consumer (and maybe some SMB), instead of large companies and industries who get to negotiate their term with insurance companies individually?
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DLFREEBIRD
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Re: Pandemic Risks Insurance

Sun Jul 05, 2020 12:35 pm

anrec80 wrote:
rfields5421 wrote:
Saw an article today that NASCAR in the US, along with other sports leagues and the movie industry are trying to get the US Congress to change some laws to make such risks insurable.

1) What insurance company could evaluate such a risks, and issue a policy?

2) Surely such insurance would not be affordable?

3) The call is for the government to provide some assistance/ backing for such insurance. I think this is a very bad idea.


Insurance wise - Lloyd’s of London is known to be insuring pretty much everything. Will it affordable - that’s a different story.


pandemic risk is uninsurable sure restaurants are putting in claims for business interruption, but they are being denied. because no policy has a pandemic clause.

congress is looking into way to force insurance companies to insure but they are getting pushback from the insurance industry. Basically, the federal government is the only one who could possibly cover losses.
 
Olddog
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Re: Pandemic Risks Insurance

Sun Jul 05, 2020 12:50 pm

DLFREEBIRD wrote:
pandemic risk is uninsurable sure restaurants are putting in claims for business interruption, but they are being denied. because no policy has a pandemic clause.

congress is looking into way to force insurance companies to insure but they are getting pushback from the insurance industry. Basically, the federal government is the only one who could possibly cover losses.


In the US, but there is a whole world out off there.

Have a look here

Business News
May 22, 2020 / 8:07 PM / a month ago
Insurer AXA must pay restaurant's COVID-19 losses, French court rules
Elizabeth Pineau, Maya Nikolaeva

PARIS (Reuters) - A Paris court ruled that insurer AXA (AXAF.PA) must pay a restaurant owner two months’ worth of coronavirus-related revenue losses, the restaurateur’s lawyer said on Friday, potentially opening the door to a wave of similar litigation.
Stacked chairs are seen inside closed "Le Bistrot d'a cote Flaubert" restaurant, amid the coronavirus disease (COVID-19) outbreak, in Paris, France, May 22, 2020. REUTERS/Christian Hartmann

The ruling will be of interest to restaurants, cafes and nightclubs in Britain and the United States which are also threatening legal action against insurers who have not paid out on business interruption policies.

Axa said it would appeal.

The case was brought by Stephane Manigold, who owns four Paris restaurants. He filed a lawsuit demanding AXA cover his operating losses after a government order in mid-March to close bars and restaurants to slow the spread of the coronavirus.

When he learned of Friday’s verdict at his office, Manigold high-fived a colleague and his supporters applauded. “This is a collective victory,” he told Reuters. He later cried as he spoke to reporters in front of one of his shuttered restaurants.

The court said the administrative decision to close the restaurant qualified for insurance cover as a business interruption loss.

“This means that all companies with the same clause can appeal to their insurers,” Manigold’s lawyer, Anais Sauvagnac, said.
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anrec80
Posts: 2759
Joined: Mon Jan 10, 2011 7:50 am

Re: Pandemic Risks Insurance

Sun Jul 05, 2020 2:14 pm

DLFREEBIRD wrote:
pandemic risk is uninsurable sure restaurants are putting in claims for business interruption, but they are being denied. because no policy has a pandemic clause.

congress is looking into way to force insurance companies to insure but they are getting pushback from the insurance industry. Basically, the federal government is the only one who could possibly cover losses.


Well, insurance companies in general are pretty good at excluding any large scale events, on any policies. For such cases, there needs to be a government mandated reinsurer to absorb the risks. Similar to how it is done with flood insurance in some areas.
 
ltbewr
Posts: 15111
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Re: Pandemic Risks Insurance

Sun Jul 05, 2020 6:32 pm

Especially after the massive losses from asbestos and pollution cases in the 1980's putting many insurers, re-insurers and investors with Lloyd's of London bankrupt, I doubt medical pandemics could be covered. I would suspect almost all property and business interruption insurance has exclusions of 'acts of God' which pandemics would be considered. Business interruption insurance is more about damage from fires, certain types of floods like broken water pipes.
 
frmrCapCadet
Posts: 4102
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Re: Pandemic Risks Insurance

Sun Jul 05, 2020 8:55 pm

I suspect courts may be inclined to require insurance companies to cover a few weeks or months.
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LCDFlight
Posts: 440
Joined: Wed Jan 01, 2020 9:22 pm

Re: Pandemic Risks Insurance

Tue Jul 07, 2020 2:43 pm

I only have average knowledge about insurance, but I don't think any insurance company is big enough to insure multi trillion dollar risks.

It is understandable that NASCAR and other businesses seek a massive gift of money from the government. This has been proven to work in the past. I think most businesses like money. Why not ask for it? Business isn't always easy.

In general, the one thing I know about insurance is that it isn't designed to by a net payer of money out from them to you. If you do get a massive payout, they will require society to make masive payments in over time. If "society" means the government, that means you have what is called a "drinking straw into the federal treasury." That is what we all want; a source of unlimited income.
 
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Tugger
Posts: 10400
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Re: Pandemic Risks Insurance

Tue Jul 07, 2020 3:46 pm

The insurance industry in the USA has about 9 trillion in total assets to address their covered obligations. That isn't all liquid of course and is designed to be accessed over a planned time period with allowances for spikes when needed. The base truth for the industry is always: What do they want to cover, what are they required to cover, what can they exclude, and how much can they exclude and/or limit their requirement to payout.

https://www.treasury.gov/initiatives/fi ... Report.pdf

https://www.iii.org/publications/insura ... t-a-glance

In reading on the COVID issue, the main source of claims is "business interruption". But most policies focus on only when there is a "physical" issue (for example damage due to fire, street flooding etc.) and many/most include language to exclude "virus related" issues (though many of those exclusions appear to have been written for self-caused situations, when a business is careless and causes infection like e.coli due its own lack of care) but these exclusions are now being pointed to as also apply to pandemic level problems that interrupt business. Many policies also exclude "impossible to foresee" events (lets say a meteor hits your town) to cover all other massive loss events. And ultimately these are almost all at some point litigated in court to see if they stand (and when the industry loses in court then new policy exclusions are added to existing policies).
https://www.cpajournal.com/2020/04/29/w ... us-losses/
https://www.insurancejournal.com/news/n ... 562738.htm

Tugg
I don’t know that I am unafraid to be myself, but it is hard to be somebody else. - W. Shatner
There are many kinds of sentences that we think state facts about the world but that are really just expressions of our attitudes. - F. Ramsey

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