UPFRONT
EDITORIAL
The importance of words
T
he coronavirus pandemic has infected the vocabulary of our daily lives. Terms such as ‘social distancing,’ ‘flattening the curve’ and ‘quarantini’ have reached buzzword status, and conversations about remote working and virtual Zoom meetings have become that other overused phrase: the new normal. This pandemic-induced vocab shift has infiltrated the insurance industry. While yesterday’s buzzwords – from ‘hard market’ to ‘social inflation’ – remain as important as ever, today’s top concerns in the industry are all virus-related. How long will the COVID-19 pandemic last? Is the industry sufficiently capitalized to handle the economic fallout? How can catastrophic pandemic risk aggregation be mitigated? Will the industry have to fight some costly lawsuits? Unfortunately, for many property & casualty insurers around the world, the answer to that final question is yes. Pandemic-related litigation started coming thick and fast through April and May as many businesses sued their insurance carriers over a perceived lack of coverage. Most of the lawsuits so far have revolved around denied business interruption claims after mandatory closure of nonessential businesses.
The coronavirus has illuminated the importance of clarity in policy language, terms and conditions. For humans in a time of crisis, a solid ‘yes’ or ‘no’ is far more comforting than a ‘maybe’’ Most traditional policies do not offer coverage for business interruption or supply chain disruption due to a pandemic such as COVID-19. Generally, business interruption insurance will only trigger if there is a direct physical loss to property – unless there is unique language written into the insurance contract that deems otherwise. Thus, lawyers are coming in hard against P&C insurers over their choice of words. They are pouncing on any ambiguity in the insurance policy language, especially if policies do no not expressly exclude losses caused by viral infections such as COVID-19. What lessons can the industry learn from this? The coronavirus has illuminated the importance of clarity in policy language, terms and conditions. For humans in a time of crisis, a solid ‘yes’ or ‘no’ is far more comforting than a ‘maybe.’ Perhaps COVID-19 will ultimately help insurers flatten any curves in potentially ambiguous policy language.
The team at Insurance Business Canada
www.insurancebusiness.ca EDITORIAL Managing Editor Paul Lucas Editor Bethan Moorcraft Writers Lyle Adriano, Ellen Burkhardt, Tom Goodwin, Alicja Grzadkowska, Kasi Johnston, Gabriel Olano, Ryan Smith, Ksenia Stepanova, Mia Wallace Copy Editor Clare Alexander
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