The Uninsurability of Global Pandemics: A Deep Dive into Business Interruption Coverage

The Uninsurable Nature of Global Pandemics

Triple-I CEO Sean Kevelighan's testimony before the U.S. House of Representatives' Small Business Committee on May 21 underscores a critical point: global pandemics are uninsurable. Unlike typical catastrophes limited in geography and time, pandemics have the potential to impact everywhere simultaneously, necessitating government intervention for support.

The Financial Implications of Forcing Coverage

Forcing insurers to cover pandemic-related losses not involving physical damage could cost the industry between $150 billion to $400 billion per month. This retroactive approach would bankrupt insurers, decimating the industry's financial resources just when they are needed for natural disasters like tornadoes, hurricanes, and wildfires.

Industry and Regulatory Support for the Uninsurability View

The insurance industry and regulatory bodies are aligned in their stance that pandemics are uninsurable. The National Association of Insurance Commissioners (NAIC) opposes retroactive business interruption coverage for COVID-19, citing significant risks to insurer solvency. Additionally, six Republican Senators warned President Trump that altering insurance law to cover all pandemic claims would devastate capital reserved for other insurance claims.

In conclusion, while the debate over business interruption coverage during pandemics continues, it is clear that the insurance industry is not equipped to handle such widespread and simultaneous losses. Readers should be aware of their policy exclusions and consider government support programs in times of global crises.