The coronavirus global pandemic has caused huge devastation around the world, affecting individuals, businesses, and economies alike. The financial impact of the pandemic in the United States has been severe, with many businesses forced to close their doors in March to control the spread of the virus.
There is now fury among business owners, as many filed business interruption insurance claims only to find their claims have been systematically rejected.
According to reports, commercial insurance providers state that businesses should have paid for specific ‘pandemic insurance’ if they wanted to recoup their financial losses forced upon them by the pandemic.
Insurance Companies Overwhelmed by Claims
The global pandemic has resulted in an unprecedented situation for insurance companies. In fact, insurance providers such as health insurance companies and business insurance providers have found themselves overwhelmed by claims.
The rate at which the infection spread meant that for companies providing health insurance COVID 19 claims were coming in thick and fast. However, the insurance industry has not only had to deal with health insurance COVID claims.
Other sectors of the insurance industry have also been affected; providers that offer business interruption insurance included. Huge numbers of claims have been filed by business insurance providers, most of which are from business owners who have held insurance for years.
According to reports, the losses to the insurance industry because of the global pandemic could be significantly higher than 9/11.
An Uncertain Future for Businesses
Non-essential businesses that were forced to close in March now face a very uncertain future. Many suffered huge losses during the period, but some were optimistic that their business interruption insurance would cover them.
However, many are now starting to realize they may not be able to recoup their losses because they were not covered for this situation. This is, despite, continuing to make premium payments even during the pandemic.
One New York business owner explained that his business had been paying out hundreds of thousands of dollars a year for insurance. He assumed that the high premiums meant comprehensive coverage. However, when he tried to claim for business interruption, his claim was turned down.
There is a similar pattern across the board, with huge numbers of business owners filing for claims because they believed they were covered for the short-term financial losses.
While there are federal aid options available to qualifying businesses, the process is not as fast or efficient as an insurance claim. So, even if businesses that have been denied payouts are now turning to federal aid, it could take far longer for them to receive any money.
Money for Nothing
The harsh response of insurers to business owners who are making claims has resulted in many people wondering why they were paying premiums at all.
Insurance industry officials said believe businesses must suffer ‘direct physical damage’ in order to be covered, and the global pandemic does not fall into this category.
They also claim that their policies include clauses that state viruses are not covered. Some argue, however, that this is not just a standard virus but an unprecedented global pandemic.
Officials have been quick to point out that this is not the first time the insurance industry has denied mass claims from businesses. The same sort of pattern was seen with disasters such as Hurricane Katrina, even with business owners who had comprehensive coverage.
Bills Introduced to Make Insurers Pay
As a result of the position many businesses have found themselves in, bills have been introduced in several states across the country—New York, Massachusetts, and New Jersey included. However, these bills are still under consideration at present.
In the meantime, businesses are struggling regarding how they can continue operating with no financial backup from insurance companies.
The insurance industry has argued that paying out these claims to businesses would result in the industry becoming insolvent. However, the industry is thought to have up to a trillion dollars in reserves, which raises a lot of questions indeed.