Month: January 2021

Allianz Global Corporate & Specialty (AGCS) conducts annual research on the views of 2,769 industry experts in 92 countries and territories, including CEOs, risk managers, brokers, and insurance experts. The 2021 Allianz Risk Barometer identified the “Covid Trio”—business interruption, pandemic outbreaks, and cyber incidents—as 2021’s major business risks:

• Business interruption. Although Covid-19 emerged as the dominant risk last year, it only added to multiple other concerns for business interruption. This is the 8th time that business interruption has fallen as the top risk for the annual Allianz Risk Barometer report. More traditional business interruption risks like natural catastrophes, extreme weather, and fire, remain major threats for business interruption across many industries. Additionally, there is growing awareness of other risks such as political instability, violence, and terrorism. 

• Pandemic outbreaks. The 2020 Covid-19 global outbreak demonstrated that business interruption events on an extreme, global scale are real possibilities. According to expert Philip Beblo of AGCS’s global property underwriting team, “The consequences of the pandemic—wider digitalization, more remote working and the growing reliance on technology of businesses and societies—will likely heighten BI risks in coming years.”

• Cyber incidents. The world recently accelerated its trend toward remote work and digitalization as a result of the need to stay at home during the pandemic. The FBI reported that during the first wave of lockdowns in April 2020, cybercrime incidents increased by 300%. Cybercrime is estimated to cost the global economy more than $1 trillion, which is a 50% increase from two years ago. For several countries, including Brazil, France, India, Japan, and the U.S., cyber incidents are a top three risk.

The report notes that building greater resilience in business models will be key to mitigating future disruption. 

Although it’s a new year, Covid-19 and its effects are not yet in the rearview mirror. American businesses are still struggling. Policymakers have not yet executed a viable, sustainable, and inclusive government-backed solution to provide relief for the COVID-19 business interruption crisis, or established a solution for the inevitable crises of a similar caliber in our future. As the 2021 Allianz Risk Barometer indicates, the pandemic and business interruption concerns are too important for stability to dismiss. It’s essential that policymakers prioritize building resilience in 2021, and a necessary first step is a federal backstop for this pandemic and for future ones.

You can read the full report on 2021’s major business risks here.

The vast majority of Americans continue to believe that COVID-19 relief should come via public policy solutions — and not litigation — according to polling released this week by the American Tort Reform Association (ATRA). 

Key takeaways from the poll include:

• 59% say those harmed by the pandemic should get assistance from policies passed by elected officials, versus just 7% who say they should get payouts from lawsuits
  
• 74% say small businesses affected by COVID-19 should be supported by government grants or loans versus 6% who say lawyers should help small businesses pursue legal claims

More information on the polling is available on ATRA’s website. For information on the principles the broader insurance industry have put forth for a government-backed pandemic policy solution, click here.

On January 15, the U.K. Supreme Court released a ruling in favor of policyholders for a business interruption (BI) test case appeal, providing clarity on some key contractual uncertainties for pending claims. The original case was brought by the country’s Financial Conduct Authority to the U.K. High Court on behalf of affected businesses.

While the findings of the verdict were highly anticipated by insurers and policyholders in the U.K., the ruling is not an indicator to the BI litigation landscape in the U.S., according to Insurance Information Institute (Triple-I) CEO Sean Kevelighan. As reported by The Wall Street Journal, Kevelighan makes clear that “the British policies in question and typical U.S. policies have key contractual differences that would limit the applicability of the ruling.”

To date, there has been a growing list of court decisions in state courts across the U.S. in favor of insurers, affirming BI policies do not cover COVID-19 shutdowns. Direct physical loss or damage must occur for a BI claim to be triggered, and government orders do not constitute direct physical loss or damage to property.

For more information and resources, go to fairinsure.org or reach out to the Triple-I for more info.