Proposed pandemic endorsement would extend the term of an expiring policy after emergency is declared

A pandemic endorsement first proposed by insurance brokers is now pending approval by the board of Insurance Bureau of Canada (IBC).
The premise of the proposed endorsement, brought to IBC by the Insurance Brokers Association of Canada (IBAC) and the Toronto Insurance Conference (TIC), is that no policyholder should be penalized because of a disruption arising from a pandemic or a similar disaster scenario such as a hurricane or earthquake.
Principally, after the declaration of an emergency, the proposed endorsement would extend the term of an expiring policy or suspend the cancellation notice period for a policy pending cancellation.
The declared emergency must have a direct effect on the insured (or their premises), or on the operations of brokers or insurers. Premium would continue to earn at expiring rates on a pro rata basis.
The endorsement includes advisory wording, meaning that even if IBC’s board adopts the endorsement, it would be left up to individual insurance companies to decide whether they would adopt the same wording. The proposed endorsement would not apply automatically to any property and casualty insurance policies.
The advisory wording is an endorsement that property and casualty (P&C) insurers can choose to add to policies as they are issued and /or be read into existing coverage.
The proposed extension of an expiring policy may be of varying length, depending on the length of the emergency, but can be up to a maximum of 120 days (90 days, plus up to 30 days’ time allowed for the resumption of business).
As proposed, the endorsement would effectively prevent new insurer-initiated cancellations, since no termination notice periods can proceed while the emergency period or ‘recovery interval’ are in effect.
The wording does not do several things. Among them:
•    the wording does not extend any indemnity periods for business interruption claims already in progress or that occur during the emergency period;
•    it does not create any additional time within claims reporting limitations, or unless those limitations are tied to policy expiration; and
•    it does not apply to automobile policies. Wordings related to auto policies are government-mandated and pandemic endorsements for auto policies must therefore be approved by individual provincial jurisdictions.