U.S. property and casualty insurers have a $800 billion surplus (meaning assets exceed liabilities by $800B). At least three states are pursuing legislation to force insurers to use that surplus to cover COVID-19 losses, that may otherwise be excluded.
Litigation between policy holders and insurance companies for business interruption losses is just getting started, including a high-profile lawsuit filed by Chef Thomas Keller's French Laundry.
Lawmakers and regulators are pressuring insurers to go beyond the legal language of policies to get cash to Americans amid the mounting cost of shutdowns from the coronavirus pandemic. In at least three states, lawmakers have proposed legislation to force insurers to pay billions of dollars for business losses tied to government-ordered shutdowns. In other states, regulators are pushing insurers to expand coverage under personal-car policies to also cover certain commercial activity, such as delivery of takeout meals by owners and employees of restaurants that are struggling to survive bans on dine-in eating. This push comes despite specific contractual exclusions in most standard policies for claims stemming from viruses. As a result, some insurers are threatening court challenges over these efforts to rewrite policies and provide benefits that weren’t priced in.
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