Post-COVID-19, Some Businesses May Look to Captives for BI Solutions, Observers Say
From: AM Best, May 6, 2020
Reprinted with permission

WASHINGTON – In a post-pandemic world, disgruntled businesses may look to risk-mitigation alternatives like captive insurance companies, according to some captive market observers.

One of the points of contention between business owners and commercial insurers has been business interruption coverage due to the COVID-19 shutdown. Most businesses discovered their BI policy did not cover pandemics, and many have filed lawsuits and lobbied legislative bodies to pass laws retroactively forcing insurers to cover it.

Existing BI policies provided actuarially accurate premiums, according to David Provost, deputy commissioner, Vermont Department of Financial Regulation. Business interruption coverage is typically triggered by events causing direct physical loss or damage.