I received a link to this website from in an e-mail from Lucques. There is also a support letter you can sign.
@robert: is there a way to make the website link a banner of some sort?
I generally support the restaurant coalition’s proposal with the exception of having the government to force insurers to pay out on business interruption claims. It literally makes no sense since the typical commercial general liability insurance policy language spells out conditions on what triggers business interruption coverage. In this particular case, direct physical damage to the property needs to happen before coverage will trigger. Shutting down a dining area to prevent the property from potential exposure to a virus simply isn’t the case.
Yeah, I understand that the actual text differs (or, at least, my understanding is that the actual text differs). I’m conflicted about this. I feel that, while COVID-19 concretely does not trigger coverage, the government has ordered shut down that affects the most profitable part of their business for weeks-months (for reasons that have nothing to do w/ the specific business itself [e.g., sanitary issues]), and this is not something anyone would’ve or could’ve imagined before. So I can understand why they want coverage.
There are also real effects if insurers are forced to foot the bill. If insurers have to pay out to the restaurants, that means all other businesses’ business interruption claim would also trigger. Since pandemics was never contemplated in actuarial data and that no premium was ever charged for this risk, the current reserves that the entire insurance industry have for legitimate claims would be drained in 2 to 3 months. In effect, all other legitimate claims that are filed would get nothing and most insurers would be bankrupt.
Interestingly, the one and only insurer, Marsh, offered a separate line of coverage in 2018 specifically targeting pandemics called PathogenRX. Covid19 would’ve triggered coverage. But guess what? Not a single policy was sold.
When the government shuts businesses down, it should cover the costs.
Insurance policy prices are based on actuarial projections. Making insurers pay for things that the insured businesses didn’t pay for is just pushing the losses from one group of businesses to another.
I’m skeptical about #1, the loan proposal, as well. Most restaurants have very small margins as it is. If they have no revenue for months, there’s no way most would ever be able to pay back loans.
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Now that is fascinating. I totally understand why not a single policy was sold, though. I mean, if I were restauranteur, I can’t say that pandemic coverage would be very strongly on my mind (prior to the last few wks), right? It will be interesting to see how coverage changes (or how restauranteurs choose to cover themselves) once this is all over.
For the short term, I do wonder if there is some type of partial coverage that would work in terms of insurers paying out a limited amount (so that they can still cover clearly-covered claims and not go bankrupt) and the government paying out a partial amount?
There is no partial coverage since coverage either gets triggered or it doesn’t. There’s simply no way for any insurer to mitigate a pandemic loss when the entire risk pool gets hit unless they charge an exorbitant amount of premium that nobody can afford.
The best way to tackle this problem going forward is establish something along the lines of National Flood Insurance Program by the federal government. An alternative option would be something like the The Terrorism Risk Insurance Act by the federal government where the government steps in and act as an reinsurer and pays for claims up to 100 billions after certain conditions are met and if the insured elected to purchase coverage. But guess what? 99.9% of people decline to purchase this coverage too! And notice how even the federal government is only willing to cover up to 100 billions total. For this particular Covid-19 business interruption scenario, we’re talking about as much as $300+ billions per month in claims…
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