Business Insurance: Perspectives: ‘Causation’ Key in Hurricane Ian Coverage Disputes

Business Insurance, September 29, 2022

Jared Zola and Kyle P. Brinkman ●

Hurricane Ian and its aftermath are wreaking havoc in the Caribbean and Florida. While the situation is developing rapidly, Ian has moved through Florida after initially making U.S. landfall as one of southwest Florida’s most intense hurricanes in history. It produced catastrophic storm surge exceeding 10 feet in certain locations, destructive winds packing maximum sustained winds of more than 140 mph and relentless rainfall.

The economic impact of the storm will be felt by businesses and individuals across Florida and the southeastern United States for some time. Many businesses have and will continue to suffer direct damage to property and lose income due to the resulting interruption of their operations, but many other businesses are also likely to lose substantial income due to evacuation orders, disruption of utility service and disruption of the operations of key suppliers or customers. Florida is home to many businesses in the real estate, retail, hospitality, senior living, distribution and entertainment sectors that may face significant exposures to their operations.

Businesses should examine their insurance policies closely and not indiscriminately accept coverage denials premised on flood exclusions, or other excluded perils.

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Pay Attention to Policy Language in a Hardening Insurance Market

Ian Ascher[1] and Jared Zola

The insurance market has proven to be a difficult environment for buyers in 2019. The long tenure of the soft insurance market cycle is changing, and is presenting challenges with pricing, capacity, and sustainability of favorable coverage terms. Coming out of difficult natural catastrophe years in 2017 and 2018, the property insurance market took a sharp turn to protect insurers’ bottom lines. While hardening of the property insurance market was expected, the broader casualty market has taken this opportunity to drive corrective action on their portfolios as well, leaving insurance buyers with little leverage.

How Insurers Are Reacting to the Market Shift

Insurers are approaching the market shift with different strategies, some focused on rate increases, while others are focused on restricting terms, or both. While individual loss experience still plays a role in renewal outcomes, there appears to be more of a portfolio-level push on rate and terms regardless of individual quality of risk factors for any given policyholder. In this environment, stricter control over capacity deployment leads to less competition, which may force the buyer into tough decisions regarding what utility insurance provides for its organization. The guarantee of comprehensive coverage at a fair price becomes harder to balance in a setting where definitively having both is less than certain. Continue reading “Pay Attention to Policy Language in a Hardening Insurance Market”

Contingent Business Interruption (CBI) Insurance: When Winter Storms Impact Your Suppliers or Customers

Robyn L. Michaelson

Michaelson, Robyn L.The National Oceanographic and Atmospheric Administration recently released its early forecast for this winter, predicting below-normal temperatures in the southern states and more snow and ice in the Southeast.[1] As we learned in winters past, the South can quickly grind to a halt after just a few inches of snow. If you or a business you rely on operates in the Northeast, you likely have your insurance squared away in case of storms. But you may not have considered similar problems with a southern supplier.

Contingent business interruption (CBI) insurance reimburses lost profits and added expenses resulting from interruption of a supplier’s or customer’s business. This insurance protects the policyholder against lost sales or higher production cost based on an inability to purchase from or sell to that third party. A CBI policy may target one supplier or customer, or broadly cover all of the insured’s customers and suppliers. CBI coverage is usually triggered by physical damage to the covered customer’s or supplier’s property.[2] Continue reading “Contingent Business Interruption (CBI) Insurance: When Winter Storms Impact Your Suppliers or Customers”

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