Insurance & Coronavirus
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The government of the Czech Republic, as well as governments in other countries were forced by the circumstances to take many measures against the spread of coronavirus, resulting in a significant reduction, restriction or even complete interruption of business activities. Many sectors have been hit hard, such as hospitality, hotels various services and other retail areas. Most of these clients have a business interruption (BI) insurance, however, they will not have suffered any physical loss as a result of COVID-19 (fire etc.), which is the normal trigger for a BI claim under a property policy.
By and large average property insurance programmes with BI coverage are unlikely to have a coverage of losses resulting from a pandemic. Most insurance policies have never intended to insure losses resulting from a pandemic. This is an exposure that the insurers recognize that they cannot afford to insure. A potential insurance of pandemic can be compared to a potential insurance of war – it is that kind of exposure the world market would be unable to cover in full.
We are ready to review your insurance coverage professionally and answer your questions, however, prior to doing so, we need to check every policy wording carefully. In case of interest kindly address us anytime, we will be happy to help you.
In general, companies are fearing most the following consequences associated with the spread of the Coronavirus:
- Partial or complete restriction of the company’s business activity (decrease in revenues, in profit, while generating fixed costs, material decrease in cash-flows), which, consequently, may also lead to a decrease in market capitalization of the company (impact on shareholders).
- Threat of liability to third-party claims of companies and the management in relation with potential omissions / negligence of protection of the customers, visitors, employees, who may be excessively exposed to the threat of Coronavirus.
- Increased costs related to decontamination / disinfection.
- Cyber risks – rise in public concern about the Coronavirus may lead to an increased number of phishing attacks on companies (scam e-mails related to coronavirus).
- Credit risk (material increase in receivables turnover time or receivables in default).
- Company mobility with respect to the scope of the travel insurance, treatment abroad.