Canadian Underwriter

HUB’s advice to corporate clients who don’t have COVID-19 coverage

March 25, 2020   by Greg Meckbach

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Hub International is encouraging corporate clients to report business interruption losses arising from COVID-19 even if they think those claims will likely be denied.

“This way, the insurance companies can provide the official response,” said Mike Moyer, Toronto-based senior vice president, complex claims leader, national claims, Canada, at Chicago-based Hub International. “A second reason is, it may offer some assistance if they are trying to recover from some government relief program.”

Several Canadian provinces have announced a state of emergency since COVID-19 was declared a pandemic earlier this month by the World Health Organization. Moreover, many companies have been cancelling events and closing offices as a precaution. The Ontario government has mandated a shutdown of all work sites unless they are on an extensive list the government says is essential.

“Most business are shutting down either voluntarily as a precautionary measure, or the government is recommending a shutdown to isolate and control this virus, but there is no physical damage to the business whatsoever,” Moyer said in a recent interview with Canadian Underwriter.

Generally, business interruption insurance is usually triggered only as a result of a peril covered under a property policy. So brokers at Hub expect to see insurance carriers take the position that COVID-19 does not trigger BI coverage, Moyer reported.

“Most of the time, when the government does decide to offer support to local businesses with financial resources, oftentimes [that’s] available only where there is no other means of recovery. Insurance is another recovery avenue,” Moyer warned.

If the government were to offer support to businesses who lost income, Hub predicts the authorities would require evidence that the insurance policy doesn’t respond, before letting the business access those government funds.

“Having a denial of coverage from your insurance carrier will satisfy that requirement,” said Moyer. “So that’s another reason we think it’s in the client’s interest to report claims.”

Closure due to pandemic is not what insurers intend to cover when they underwrite business interruption.

“The vast majority of commercial policyholders who are shut down may or may not be aware, or may not understand, the nuances of coverage,” said Moyer. “So as a broker, we are getting hundreds if not thousands of calls from our clients across Canada and the United States, from people who are asking that very question: ‘Do we have a claim?’

“Our response to that is, ‘Generally speaking, this is a largely uninsurable event. However, as brokers, we do not have the authority to deny claims. We think it is in our clients’ best interests – if they aren’t sure, and they have had an impact on their business – to report it and let the insurance company come back with a formal decision on coverage.”

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10 Comments » for HUB’s advice to corporate clients who don’t have COVID-19 coverage
  1. Chris says:

    Terribly inefficient approach to take on an ‘industry-wide’ scale. Imagine the sheer volume of claims to be addressed by insurers with this approach (think an incoming tsunami heading towards adjusters), not to mention the number of hours to report, document and track the claims on the broker side (for 1 out of 5 commercial clients over an entire book?). ‘Head figures’ among industry bodies/representatives (think IBC for Insurers, provincial broker associations and industry leaders such as Hub, Aon and Marsh) should be in constant contact with government to prevent such a waste of time and effort. A united, agreed-upon response arrived at through mutual consultation would work best.

    • Eric Lapenis says:

      It’s irresponsible for this broker to be making this reckless recommendation during a crisis.

      • Doug says:

        Back in the day we used to say that brokers that reported claims that were absolutely not covered lacked the training and conviction of a real professional advocate.
        Seems it’s still true.

  2. Eric Lapenis says:

    Well this is terrible advice. Maybe if the government starts offering assistance programs contingent on not having the losses covered by insurance, but otherwise it’s a massive waste of time for insurreds. As brokers we may not have claims authority but we should be able to interpret obvious wordings and determine whether coverage is likely to exist.

  3. Eric Gaudrault says:

    IBC+IBAO+FSCO+Insurance companies= Educating Government!

    DO NOT bombard claims with this useless approach!

  4. Mike says:

    This is exceptionally poor advice and seems driven by the desire to limit their E&O exposure rather than to provide anything of benefit to their clients or to the industry. If passing the buck is their advice then why do they deserve to earn any?

  5. Steve Earle says:

    Here we all are trying to flatten the curve in health care. Asking the public not to go to hospital unless absolutely necessary because it will be overwhelmed.
    And now we have a completely irresponsible broker advising that every customer they have should submit a claim to see if they get denied, overwhelm claims departments and lower the overall service standards for all the usual claims that are coming in anyway.

  6. TBA Doe says:

    How irresponsible of such a large brokerage.

    This is purely trying to score points with the public, that will only be disappointed in the outcome and thereafter a backlash against insurance companies that is unwarranted. This is obviously due to a lack of experience by HUB, when it can easily be pointed out in property wordings exclusions for contamination, inherent vice, etc.

    This is a large fail, and once the backlash occurs against the insurance companies, HUB should have all their contracts dissolved for such reckless behavior.

    ESPECIALLY, when all the governments understand it and are stepping in.


    Purely disgusting!

    • TBA says:

      Further to my current response, I also forgot to mentioned, there is no direct loss. What triggers BI is the direct physical loss, therefore if excluded under property, BI doesn’t apply.

  7. Joe says:

    Mike Moyer certainly has never worked on the front lines and has a lot of time on his hands. Really bad idea.

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