May 14, 2020

As the COVID-19 pandemic has grown, insurers have been repeatedly attempting to send the message that the policies they have issued, such as property policies providing business interruption losses, are not intended to cover losses resulting from the pandemic.  In stark contrast to that message, however, several insurers have recently reported significant losses during Q1 2020 as a result of the COVID-19 pandemic.  Some of these losses are described below:

• American International Group Inc. (“AIG”) reported last week a 93% drop in quarterly adjusted profit, due to the fact that it was setting aside money to cover COVID-19 related claims.  Brian Duppereault, AIG’s CEO, said AIG believes COVID-19 will be the “single largest [catastrophe] loss the industry has ever seen, and it will continue to have significant global economic ramifications for the foreseeable future.”
• Axis Capital Holdings Ltd. Recently estimated it will pay first-quarter catastrophe-related claims of $300 million, including $235 million in COVID-19 claims.
• Reinsurer Munich Re has reported Q1 2020 losses of nearly $700 million largely due to COVID-19

Many policyholders who have submitted COVID-19 related claims have likely received, or will receive, denial letters from their insurers.  However, the public statements by insurers described above and their acknowledgment of losses caused by COVID-19, amplify the message we have been expressing in prior posts and articles—these policies are not “one size fits all” and variations between the coverage provisions (and exclusions) found in policies might provide a policyholder with arguments that coverage does indeed exist.  Policyholders facing COVID-19 related claims or losses should consult with counsel to determine if relevant coverage exists.