New York has joined New Jersey, Ohio, and Massachusetts with pending legislation regarding insurance coverage. At the same time, it is pretty obvious that the insurance industry is doing everything it can to explain how such legislation, if passed, would dwarf any ability to pay amounts claimed.
As pressure builds for the industry to shoulder some of the economic burden from the coronavirus pandemic, property-casualty insurers outlined just how much business interruption losses from shuttered businesses would cost: up to $383 billion per month, according to the American Property Casualty Insurance Association.
The estimate includes losses from businesses with fewer than 100 employees and ranges from $220 billion to $383 billion, according to David Sampson, APCIA president and CEO. Surplus for the entire P/C industry comes in at about $800 billion and is there to pay all future insured home, auto, and business losses.
It is obvious that the insurance industry’s response is, “If you do this and assuming it is legal, you will bankrupt us.”
King and Spalding is certainly a respected law firm. They have entered the fray with a lawsuit in Chicago filing on behalf of theaters and restaurants. This lawsuit was filed in Federal Court and asked for the following declaratory relief:
Pursuant to 28 U.S.C. § 2201, Plaintiffs seek a declaratory judgment from this Court declaring the following:
(a) Plaintiffs’ losses incurred in connection with the Closure Orders and the and the necessary interruption of their businesses stemming from the COVID-19 pandemic are insured losses under the Policies;
(b) Society Insurance has waived any right it may have had to assert defenses to coverage or otherwise seek to bar or limit coverage for Plaintiffs’ losses by issuing blanket coverage denials without conducting a claim investigation as required under Illinois law; and
(c) Society Insurance is obligated to pay Plaintiffs for the full amount of the losses incurred and to be incurred in connection with the covered business losses related to the Closure Orders during the four-week indemnity period and the necessary interruption of their businesses stemming from the COVID-19 pandemic.
It also asked for money damages.
The allegation that an insurance company waived defenses by general denials or not conducting a claim investigation as required by law in Illinois is certainly going to be hotly debated. If this were the law everywhere, policyholders would win almost all of their cases if all they had to do was prove their insurance company did not conduct an investigation in a full and fair manner as required by law.
If you are getting a little tired of all this coronavirus insurance coverage debate and want to listen to some “block and tackling” issues of property insurance claims handling, be sure to check in on my Facebook livestream at 2 pm today. Use this link here.