Coronavirus: Insurance questions answered
Posted on March 28, 2020
The 2020 Coronavirus pandemic in Australia is part of the rapidly spreading global epidemic of Coronavirus disease 2019 (COVID-19) as it is officially known, a novel infectious illness caused by severe acute respiratory syndrome Coronavirus 2 (SARS-CoV-2).
As at 26 March, Australia had reported 8 deaths and 2,367 confirmed cases of the disease. Globally, more than 22,000 people have succumbed to COVID-19 while over 500,000 cases of infection have been confirmed in about 170 nations and territories. So far, 117,000 people have recovered from this pandemic.
In recent times, it hasn’t been uncommon to hear declarations of insurance catastrophes in Sunshine Coast and Australia but the novel Coronavirus (COVID-19) outbreak is unlike anything we’ve heard or seen before.
While most of us have already gone ahead to define the outbreak of COVID-19 as a catastrophe, the insurance declaration isn’t really based on a surge in claims—no, at the moment, no one has the slightest idea how many claims will be filed by the time the virus dies away—however, it’s important that “consistent messages” be delivered.
Insurance questions answered
There’s so much confusion in most countries including Australia, so to get the insurance questions answered, I spoke to various experts and came up with the following guide which summarises how various types of insurance covers are affected and their response to the COVID-19 disease.
Various events including music festivals, sports events and industry conferences have been impacted by the virus though most event cancellation policies include communicable disease exclusion.
While an extension can be issued, unfortunately now that the coronavirus outbreak is a “known event” it’s impossible to get cover for it.
According to reports from Sportscover a specialist underwriting agency, most of their clients did not have a fore sight or thought to make arrangement for such an extension.
Even if those insured made prior arrangement to cover communicable diseases before the outbreak, insurers would unlikely pay for the claims if the cancellation of the event was based on a decision made by organisers and not a directive from the authorities.
The Friday declaration by the Federal Government limiting gatherings to just 500 people could therefore carry some implications on this policy.
The collapsing global markets are indicative that it’s not business as usual. The world of business has been significantly affected—from lock downs to shut downs, it’s all bad news for business.
And even the various stimulus set up by governments is not helping— the markets continue to fall as recession looms. This is sure to have far-reaching impact on the insurance sector.
While most business interruption policies vary significantly, 99% could exclude coronavirus related claims.
According to Leon Briggs of Sedgwick, it’s easy to understand why insurance firms wouldn’t want claims for an occurrence that affects nearly every business in the country.
The Insurance Council of Australia (ICA) notes that “some specific policies may differ” but most of them are likely to feature exclusions related to losses arising as a result of diseases listed under the Biosecurity Act or the Quarantine Act.
Information posted by StormAssist suggests that the home and contents sector is considered an essential service. This means that people and businesses with open insurance claims and more importantly, those who have approved building contracts are still working with loss of momentum.
How is construction considered an essential service?
According to Master Builders Victoria, confirmation has been received from the Victorian State Government that the stage one restrictions announced by Scott Morrison do not apply to construction sites.
The statement from the Victorian premier says:
“The businesses that will close due to the Stage 1 shutdown include pubs, clubs, nightclubs, Crown Casino, and licensed venues in hotels and pubs. It also includes gyms, indoor sporting venues, places of worship, cinemas and entertainment venues. Restaurants and cafes will only be allowed to provide home delivery or takeaway services.
This decision and other containment measures are meaningless if Victorians don’t take them seriously or don’t think they will be caught if they flout the rules.”
Open storm damage claims
If you have an open storm damage claim then you can contact Storm Assist via the Storm Assist website.
This insurance cover is probably the most worrying and confusing for customers given that different insurance companies will handle it in varied ways to both trip cancellations and medical expenses incurred overseas.
The easiest way is to “check your policy” but then different insurers have wide variations in their policies. Some insurance firms go beyond their policy wordings, which would be useful for their clients but again could add to existing state of confusion.
Numerous insurance policies incorporate a general exclusion that bars claims of actual or possible pandemic or epidemic or a threat of a pandemic or epidemic.
Obviously, this is bad news to those who depend on insurance cover, but again, it’s quite understandable.
However, not all travel policies have the pandemic excluded. No doubt, nearly all will exclude insurance claims for a “known event” though insurance companies currently don’t seem to agree on when the coronavirus achieved this status. Possible dates are between January 20 and January 31.
If the Australian government decides to enact a “do not travel” warning for various locations but an Aussie goes ahead to travel, your claim would possibly be excluded.
On the other side of cancellation, consumers who choose not to travel in the nonexistence of a government directive will most likely not be allowed to lodge claims.
At this juncture, there are concerns that for travelers, a travel insurance policy is becoming more of a gamble.
Today, we know about Covid-19 and hence it’s too late to qualify to claim. And in case a person made arrangement prior to the outbreak of the disease, would they have truly had the time to comb through a range of products and their disclosure statements just to compare exclusions related to various pandemics? Your guess is as good as mine.
According to the latest statement issued by the Financial Services Council (FSC) on behalf of the life insurance industry, the various pandemic exclusions present in general insurance are excluded in life policies.
“There are no exclusions in existing life insurance policies that would prevent the policy paying out for a claim related to coronavirus if you follow government travel advice,” the FSC says.
“No-one should be concerned about their existing life insurance policies.”
There are various concerns that the coronavirus outbreak could result in a rush of workers’ compensation claims and related premium increases.
If a worker can prove that their job significantly exposed them and caused them to be infected by the virus, then a claim can be lodged successfully.
The State Insurance Regulatory Authority of New South Wales noted that each claim shall be considered on the basis of individual merits.
According to the authority, consideration will be given to various work-related activities such as travel to a region prone to a known viral outbreak or being in contact with people who have already been infected with the virus.
Are you still confused about the Coronavirus? Well, keep it here for more updates. But remember, COVID-19 is an entirely new strain and there is no existing immunity. But various measures can go a long way in helping stem the spread—washing hands regularly, self-isolating if you feel sick or recently returned from overseas, and last but not least, exercising social distancing.
All in all, do stay safe!