I am not an insurance expert but, as I understand it, the vast majority of business interruption policies do not cover losses caused by Covid-19. That is because policies often exclude cover for ‘communicable diseases’ and where cover is provided there is often a list of insured diseases, and as this is a new virus, it is not included in that list. Presumably the rational is that insurers can only price risks of which they are aware.
In today’s edition of The Times, its Deputy Business Editor, Graham Ruddick calls for more help for the retail sector including tax breaks, debt moratoriums and rent holidays. It is not clear how he proposes those rent holidays are funded, but merely passing the burden on to landlords is unlikely to help. In fact, it would put additional burdens on many small landlords and even large ones such as Hammerson and intu.
There may be a solution however, which involves Pool Re, the government backed re-insurer for terrorism risks. In 2009, to quote Pool Re’s website:
‘The Counter-Terrorism and Border Security Act 2019 made changes to Pool Re’s founding legislation, to allow us to reinsure business interruption losses arising from a terror attack which are not contingent on damage to property. The amendment made Pool Re the first terrorism pool worldwide to extend its cover to include NDBI – Denial of Access or Loss of Attraction losses.’
The Government should, in my view, enact emergency legislation to extend Pool Re’s remit to allow property owners to use its ‘Denial of Access Cover’ for business interruption losses caused by global pandemics. That way, if it proves necessary to follow the example of, say, Italy and close shops and shopping centres, there is a clear method of recovery, without having to invent a new system. Tenants can be given a rent holiday and landlords can recover the cost of that through PoolRe.
It seems to me that is entirely in line with PoolRe’s founding principle, to provide government backed insurance cover where the insurance market is not able to.
@grahamtruddick @PoolReinsurance @hammersonplc @intu_official
#coronavirus