Román Guaita, Deputy Manager of International Claims at MAPFRE Global Risks, explains the difficulties experienced concerning claims received, the perspective of the insurance industry and this Business Unit.
The COVID-19 pandemic is an unprecedented global catastrophe. In addition to the tragic loss of human life, this pandemic is also impacting all areas of the global economy, albeit unequally.
The line of the insurance industry most affected is cultural and sporting event cancellation contingency policies. Given MGR’s portfolio, the majority of claims filed stem from Property Damage policies with Loss of Profit coverage and Contractor’s All Risk policies with ALOP coverage.
These policies usually cover extraordinary risks and natural disasters. While the COVID-19 pandemic has a number of elements that could allow it to be considered a natural disaster, Property Damage policies exclusively cover property damage to insured property and its financial consequences, regardless of any potential specific exclusions for pandemics.
“This pandemic is also impacting all areas of the global economy, albeit unequally”
Additional coverage, such as loss of profit, CBI, inaccessibility, measures by authorities, etc., are generally determined by the presence of property damage to insured property and/or facilities. Although there are coverage extensions, normally under the loss of profit section that, while still related to the events that took place in the insured facilities and/or premises, do not require property damage to be covered.
Although COVID-19 has dramatically affected people’s lives and health and is causing a great deal of economic turmoil, there is no evidence of property damage caused by the pandemic. The shutdown of activity due to COVID-19 and related financial losses are not a result of property damage, so it is difficult to find a way to classify these losses as covered by damage policies.
The claims filed with MGR under property damage policies do not usually contain specific claimable events. They are generally preemptive and vague communications whose lack of definition demonstrates the nonexistence of any specific damage.
“We are monitoring the progress of these claims, especially for those which may be taken to court.”
To date, we have been notified of 95 incidents for events occurring in 14 different countries, corresponding to 38 different corporate groups.
The majority of the claims are for unspecified amounts.
The first steps are to proactively analyze the policy in question and demonstrate an initial position on the claim’s coverage by the policy.
In the cases where we are followers, we have shared our opinion with the broker—normally the need to demonstrate covered Property Damage to trigger Loss of Profit coverage. Following common practice in English-speaking markets when coverage is being disputed, we’ve sent a Reservation of Rights Letter for a high number of claims, especially those that took place in the United States.
In cases where we are the leaders, we have stated our opinion on the coverage given the information available and issued denial letters when the claim was indisputably not covered by the policy.
We are monitoring the progress of these claims, especially for those which may be taken to court.
Deputy Manager of the International Claims Area
MAPFRE Global Risks