COVID-19 has been affecting life and businesses around the globe. The developments over the last few days have been moving fast: the World Health Organisation declared the disease as pandemic, COVID-19 has now been categorised by various governments (including those of the United Kingdom) as a notifiable disease, the US has restricted travel from certain countries and many countries are on either lockdown or self-isolation rules.
A key and primary focus of businesses will of course be safeguarding their people. However the economic consequences of what is now a global issue cannot be ignored. Potential economic impacts include the financial losses from business downturn and closures, actual cancellation or postponement of events, supply chain interruption, lack of production due to personnel staying at home, defaults on debts and contracts, and ultimate insolvency.
Will insurance therefore play a role here? The answer is – possibly, but it depends of course on applicable policy wordings. While a number of articles have been published summarizing the challenges in any such insurance claims, our advice remains to look carefully at the cover. This week an article estimated that the market could be exposed to around $8 billion of losses in relation to event cancellation alone.