US insurers use hefty estimates to offload pandemic claims
by SOURAV D | VIEW 2260
In the face of an unfathomable scale of pandemic-driven slump digested by the small-scale business, a slew of US property and casualty insurers had been gauging the pandemic outbreak as an unprecedented event in a bid to avert tens of billions in claims from the small businesses, though, even if the insurers were obliged legally to pay off the businesses, they would find themselves significantly insolvent, a study conducted by a Washington-based trade body, APCIA (American Property Casualty Insurance Association) had unveiled.
Aside from that, according to the study conducted by the APCIA, whose lobbying efforts had successfully insulated the insurers from pandemic-driven claims and discouraged a number of US lawmakers to press insurers to pay off the claims, had the US insurers required to pay off the insurance claims, it would cost them a jawdropping total between $255 billion to $431 billion per month to compensate the small-scale businesses for income lost alongside debts due to the pandemic-driven shutdowns.
Business interruption policies only apply during physical property damages, says insurers
Meanwhile, as a debate on whether the US insurers should be subject to business interruption policies due to the pandemic outbreak, had been waning amid a strong lobbying effort from the APCIA, a number of insurers were quoted saying later this week that the small-scale businesses which had business interruption policies, would become eligible for the claims only when there had been a physical damage to the property preventing them from operating businesses, while any application to cover pandemic-led losses would be utterly unconstitutional.
In point of fact, latest estimate from the US insurers’ Washington-based trade body came forth as the US Federal Reserve Chair Jerome Powell was quoted saying that the insurers would might need to pay out a maximum of $120 billion per month considering that at least half of the small businesses had business interruption coverages.
In tandem, while the APCIA had declined to comment on Powell’s remark, referring to the estimates, the APCIA Chief Executive David Samson said to a press agency, “Yes, these are eye-popping figures. This pandemic is unprecedented in its scale, reach, and economic impact. ”