Last week, the legal panel overseeing multidistrict litigation (MDL) in U.S. federal courts ruled that the hundreds of billions of dollars’ worth of business interruption (BI) claims tied to the pandemic cannot be consolidated. In their decision, the panel noted consolidation would slow down the progress of individual cases, many of which have reached the point where judges are ready to make decisions. 

“Having one judge oversee more than 1,000 cases — grouped by individual insurers — would be too cumbersome and it’s more efficient to have courts around the U.S. decide whether the coronavirus fallout triggered coverage by major insurers such as Hartford, Travelers and Lloyds of London, the legal panel ruled Friday,” a Bloomberg Law article explained. 

Bloomberg Law covered the story on October 2, and the Triple-I’s non-resident legal scholar Michael Menapace provided the insurance industry’s perspective in a written statement: “‘This is the correct result,’ Michael Menapace, a lawyer and member of the Insurance Information Institute, said in an emailed statement. ‘There are no efficiencies to be gained by combining different insurers who write different policies for different policyholders who are in different industries and made claims under different factual scenarios.'”

His comment was also picked up by the Insurance Journal for their coverage of the MDL decision.

A key consideration at hand in this decision is time. It will take months, if not years, to settle these cases in court. The plaintiffs in these cases are business owners in need of true relief that only the federal government can provide. The immense cost and great time spent litigating will only further harm business owners.

And as we’ve seen in most cases decided thus far, court decisions are likely to simply reaffirm that BI contracts are not designed to cover pandemics and necessitate a direct physical loss to property to be activated. 

You can read the Bloomberg Law article here and the Insurance Journal article here. For more information, please visit fairinsure.org.