ADJUSTERSINTERNATIONAL.COM 7 The existence of a public order doesn’t really change things. Insurers can provide civil authority BI coverage for undamaged businesses due to damage at other locations because the insurers have often underwritten those other locations, at least indirectly. When an insurer writes property coverage for one enterprise it acquires knowledge of hazards, public protection, and ingress/egress affecting neighboring enterprises. It also does so with extensive historical experience of business recoveries from disasters. Standard BI coverage is also written with the presumption that, for the most part, the event causing the loss will be limited to one area for a relatively short time. A pandemic, which circulates worldwide and comes and goes in different regions, is another thing entirely — an exposure of indefinite extent in time and space. Finally, the current trigger for civil authority coverage, physical damage by a peril insured against, is easy for all concerned to recognize objectively. In contrast, public health officials are usually the only ones with the ability to discern the presence of an impending pandemic. The existence of private insurance for business interruption could tempt public health officials to issue lockdown orders more readily, perceiving them as a precaution with no immediate costs, except to insurers. There’s considerable discussion today inWashington about federal support for some means of insuring for pandemic-related business interruption. Whatever emerges will almost certainly be substantially different from the federal terrorism reinsurance program, however. The federal backstop for terrorism losses, including business interruption, serves to keep property insurers from excluding coverage for perils they already cover, particularly fire and explosion, when these are caused by terrorist acts. Insurer participation in a federal pandemic insurance program would mean covering an entirely new cause of loss for private insurers. It’s hard to envision what role private insurers can play in such a program other than being a pass-through There’s considerable discussion today in Washington about federal support for some means of insuring for pandemic-related business interruption.
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