How much Intact is paying out for commercial COVID claims

Intact Financial Corp. is likely to pay out more than $80 million for commercial claims arising directly from the COVID-19 pandemic, but has only seen a small fraction of that so far, CEO Charles Brindamour said Wednesday.

“The total actual incurred losses is barely 10 million bucks at this stage,” Brindamour said Wednesday of commercial insured losses.

To put that into perspective, Intact reported $6.989 billion in claims incurred in 2019, 42% of which is Canadian commercial and 14% of which is U.S. commercial.

Brindamour made his comments during a “virtual fireside chat” with Mike Phillips, equity research analyst for property and casualty insurance at investment banking firm Morgan Stanley.

Phillips asked Brindamour Wednesday for some detail about the $83 million that Intact set aside during the three months ending Mar. 31 as reserves for possible commercial claims arising from the COVID-19 pandemic.

“We don’t think that number will change meaningfully throughout the year,” said Brindamour. “There is uncertainty of course. We could see adjustments one side or the other but sitting here today it has not changed.”

The World Health Organization declared COVID-19 a pandemic on Mar. 11. Since then, industries have been hit with event cancellations and closures.

Of the $83 million Intact is setting aside, $50 million is for Intact’s commercial lines business in Canada, while the other $33 million is for the United States. Intact acquired Minnesota-based commercial specialty insurer OneBeacon in 2017.

Some of that $83 million could come from business interruption. But fewer than 1% of Intact’s commercial property clients have BI coverage with specific endorsements that would trigger coverage due to a pandemic, Brindamour noted. Intact could also see claims in the entertainment, tuition reimbursement from U.S. clients and liability.

In deciding how much money to set aside for commercial claims arising from the pandemic, Intact staff looked at the entire commercial book of business and its possible exposure. The $83 million figure is Intact’s “best foot forward for the ultimate direct impact of COVID,” Brindamour said Wednesday.

Liability, “at the end of the day, in my mind, is the most important part of the exposure,” Brinadmour said Wednesday. “We are trying to assess who would be exposed in this process – think long-term care homes, both on the D&O and E&O side of things.”

Brindamour did not specifically say whether Intact has clients in the nursing home or long-term care sector who have reported liability associated with COVID-19.

But in Canada, several court actions have brought against long-term care facilities since COVID-19 first hit in earnest this past March, the Canadian Press reports.

A recent report from the Canadian Armed Forces, made public by Ontario Premier Doug Ford, alleged that in some cases, a number of people were left in filth for weeks, while others left on the floor where they had fallen. The report further observed cockroach infestations, people choking while being improperly fed, patients with brutal pressure sores, and seniors pleading for help for hours to no avail, the Canadian Press reported.

Hundreds of Canadian military members have been helping out in nursing homes and long-term care facilities since COVID-19 was declared a pandemic this past March.

Insurers are probably going to look at nursing homes and long-term care facilities more carefully and will probably wonder whether this is a systemic issue with the entire class, Stephen Stewart, president and CEO of Toronto-based Stewart Specialty Risk Underwriting Ltd., told Canadian Underwriter earlier.