Insurers: We Can’t Pay Coronavirus Business Losses, That’s Taxpayers’ Job
Friday, May 29th, 2020 Catastrophe Legislation & RegulationInsurance companies would go broke paying all the business-interruption and workers’ compensation claims they could face because of coronavirus and the resulting shutdowns, according to A.M. Best, the insurance ratings agency.
Best has surveyed more than 3,000 insurers since March and says most have plenty of capital to pay the normal run of customer claims, despite the steep recession.
What they don’t have is enough money to cover business-interruption claims that they believe are barred by longstanding policy “exclusions” or worker-compensation claims from people who lose pay because they got an epidemic virus on the job.
But attempts by state legislators and members of Congress to override such epidemic exclusions “pose an existential threat” to the property and casualty insurers who cover America’s homes, cars and business properties, according to a report on Best’s findings by Robert Farnam, insurance analyst at investment bank Boenning & Scattergood in West Conshohocken.
Best “estimates total economic losses for small businesses, under 100 employees, at $294 billion per month due to business interruption.” Forced to pay, “P&C insurers could be looking at $150 billion to $200 billion of insured losses per month,” Farnam reports.
