Swiss Re Corporate Solutions' Comments Regarding COVID-19 for Policies Issued in the United States and in the UK
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Status: 1 April 2020
In order for you to know what coverage your policy has, you should review it with your insurance agent or broker. Commercial insurance policies often have many defined terms and you must read the entire policy to determine if it covers a loss. For this reason, consulting your agent or broker is very important.
Some states have ordered insurance companies to accommodate policyholders affected by the coronavirus and COVID-19. See the notice at the end of this page for more details.
How can I learn if I have insurance coverage for COVID-19 damage?
Locate your policy and review it. Words that begin with a capital letter or that are contained in quotation marks may have special definitions found in the policy. If you see terms that begin with a capital letter (Loss) or that is in quotation marks ("loss") those terms are defined in your policy.
If you have questions about your coverage, please consult the insurance agent or broker that handles your insurance policy. For most insurance policies, the name of your agent or broker is located on the policy, often in the Declarations. If you can't find or don't have access to your policy, please consult your insurance agent or broker.
Any claims under your policy, whether or not for COVID-19 or business interruption, should be submitted as they are normally. Your policy should contain claim reporting instructions. If not, please consult your agent or broker.
What is business interruption coverage?
In general, business interruption coverage pays for damages sustained if your business operations can't take place or are reduced because of certain events such as physical damage to your property. Business interruption coverage may be labeled as "business income," "time element," "extra expense," "civil authority" coverage or by another name.
Do I have coverage for business interruption caused by COVID-19?
Insurance policies are not identical. Coverage may differ depending on the options offered or selected at the time of your purchasing your policy. Your policy's Declarations and endorsements specify your coverage (which ultimately will depend on the wording of your specific policy and the facts of your situation) and the limits (meaning the maximum we will pay if you have coverage). Our decisions on any claim that you submit to us (your insurance carrier) will be based on our investigation, the facts of your situation, and the policy wording of your specific policy.
What do your policies usually cover for business interruption?
Swiss Re Corporate Solutions operates through six insurance carriers in the United States, one of which provides licensed insurance in Canada:
- Westport Insurance Corporation (also licensed in Canada)
- North American Specialty Insurance Company
- North American Elite Insurance Company
- Washington International Insurance Company
- North American Capacity Insurance Company
- First Specialty Insurance Corporation
Our policies differ based on which carrier issued the policy, the type of insured, and the coverage that was requested. Your policy may or may not have business interruption coverage.
Coverage for business interruption is sometimes provided under commercial property policies or Businessowners Policies (BOP). The above Swiss Re Corporate Solutions insurers issue a variety of property and BOP policies that contain different types and levels of coverage. Many of the policies contain exclusions that may bar coverage for damages caused by viruses or other situations applicable to COVID-19.
In general, subject to the terms, conditions, exclusions and limitations contained in a commercial property policy or a BOP policy, the policy insures direct physical loss or damage to insured property while on insured locations.
The policy may (depending on what coverage was offered and accepted at the time the policy was issued) cover time element, also known as business interruption loss, during the period of liability directly resulting from physical loss or damage insured by the policy to insured property at insured locations. This coverage may be referred to in your policy as actual loss of Business Income due to suspension of your operations. Coverage for business interruption may only be available if the loss results from a covered cause of loss.
"Civil authority" business interruption: the policy may (check your policy) cover loss of gross earnings, gross profits, rental insurance, and extra expense incurred by the Insured due to the necessary interruption of the Insured’s business, provided that:
- the interruption directly results from an order of a civil or military authority that prohibits partial or total access to insured locations; and
- the order referenced above is caused by direct physical loss or damage as insured by the policy to property, including property excluded under a Property Not Insured section;
Civil authority business interruption coverage under a policy generally contains a requirement that the direct physical loss or damage occurred within a specified distance of the location insured by the policy. The policy generally contains a time limitation on the duration of this coverage.
"Contingent business interruption coverage" coverage may insure losses when certain situations involving suppliers or customers exist:
- The policy insures loss of Gross Earnings, Gross Profits, Rental Insurance, and Extra Expense (these or similar terms may be defined in the policy) incurred by the Insured during the period of liability directly resulting from direct physical loss or damage insured by the policy to any property, except of the type as excluded under Property Not Insured, at any location(s) of suppliers or customers, provided that such physical loss or damage prevents:
- such suppliers from supplying goods or services directly or indirectly to the Insured;
- such customers from receiving goods or services directly or indirectly from the Insured
Exclusions that may bar coverage (for either property or BOP coverages):
The policy may (check your policy) exclude coverage if one or more of the following situations are present:
- discharge, dispersal, seepage, migration, release or escape of contaminants. The definition of contaminant includes virus;
- loss caused by microorganism of any type, nature, or description, including but not limited to any substance whose presence poses an actual or potential threat to human health;
- loss or damage caused directly or indirectly by virus or bacteria regardless of any other cause or event that contributes concurrently or in any sequence to the loss;
- loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical illness or disease;
- contingent business income coverage may not apply when the only loss at the premises of a dependent property or secondary dependent property is loss or damage to "electronic data", including destruction or corruption of "electronic data". If the dependent property or secondary dependent property sustains loss or damage to "electronic data" and other property; or
- the discharge, release or escape of "pollutants" or environmental impairment of any kind and the term "Pollutants" includes any solid, liquid, gaseous or thermal irritant or contaminant;
Other limitations on coverage
Your policy may also contain a requirement that a certain amount of time (often a number of days) that must elapse during a suspension of business operations before coverage is available. Your policy may also have dollar limits on the amount of business income coverage.
What if someone is making a claim against me related to COVID-19?
Contact your insurance agent or broker. If you have a liability policy or other policy that you think may provide coverage for a claim made against you, whether or not it is related to COVID-19, immediately report it to your insurance carrier using the procedures in your insurance policy.
I want to submit a claim
Consult your policy – there should be instructions including a specific email or telephone number to contact the insurance carrier who issued your policy. You should also tell your insurance agent or broker.
I have questions about my policy
Please call your insurance agent or broker; he or she best knows your situation and your policy.
If you can find no other method of reaching Swiss Re Corporate Solutions in North America in your policy, contact us at +1 800 255 6931 or by contacting an individual listed on this key contacts website.
LENIENCY FOR POLICYHOLDERS AFFECTED BY COVID-19
Most states have encouraged or directed insurance companies to be lenient in cases of non-payment of premium or other circumstances. The accommodation that is allowed depends on the state in which the policyholder resides and the particular circumstances. For current and specific information about any accommodation available to you, please consult your insurance agent or broker. The types of accommodation that may be available, depending on your state, include the following:
- Extension of premium grace periods;
- Waiver of late payment fees;
- A moratorium on cancellations for non-payment;
- Deferral of non-renewal of insurance policies; and
- Providing continuing coverage on an expiring policy
You may also call us at +1 800 255 6931.
Colorado policyholders: You are entitled per the direction of the Colorado Division of Insurance to seek an accommodation or leniency as described above.
Connecticut policyholders: Per Connecticut Executive Order No. 7S, until June 1, 2020, a Connecticut policyholder may request a sixty (60) calendar day grace period if the policyholder (1) was laid off, furloughed, fired from employment or otherwise sustained a significant loss in revenue as a result of COVID-19 and (2) requests such a grace period – THE GRACE PERIOD IS NOT AUTOMATIC. The grace period is not a waiver or forgiveness of premium but is an extension of time to pay premiums.
New Jersey policyholders: If you are experiencing a financial hardship due to the Coronavirus ("COVID-19") pandemic you are entitled, per the direction of the New Jersey Department of Banking and Insurance, to a ninety (90) day grace period to pay any insurance premium due. During this ninety (90) day grace period, your policy will not be cancelled for nonpayment of premium. You may elect to begin this ninety (90) day grace period retroactive to April 1, 2020 or opt for the grace period to begin on May 1, 2020.
Premiums that are due but not paid during the 90-day period may be paid over the remainder of the current policy term or up to 12 months in up to 12 equal installments, whichever is longer.
Status 25 August 2021
Business Interruption Insurance and the Financial Conduct Authority (FCA) Test Case
The FCA has taken legal action in order to provide policyholders and businesses with clarity on the circumstances in which an insurance policy will provide cover for a business interruption claim resulting from the coronavirus pandemic.
The Test Case has only considered insurance policy wordings that do not require damage to the insured business premises.
The FCA's legal action asked the High Court to consider a number of factors, such as how to interpret specific terms in those policy wordings and whether insurers can rely on certain exclusions to decline claims. The Test Case is not intended to encompass all possible disputes under the policy wordings, but to resolve some key contractual uncertainties and legal 'causation' issues to provide clarity for policyholders and insurers.
Swiss Re Corporate Solutions is not a party to the court action. However we have been monitoring the situation closely and we will make claims and complaints decisions in line with any relevant court rulings.
On 15 September 2020, the High Court handed down its judgment in the test case. The High Court judgment made findings in respect of 21 different types of policy wordings used by the eight insurers who were defendants in the test case. In light of the judgment, the FCA and a number of other parties in the test case appealed a number of its findings to the UK Supreme Court.
Update: 25 August 2021: Update on the FCA's business interruption test case
Because it considered there was widespread concern about the lack of clarity and certainty for some customers who made claims for business interruption insurance relating to the coronavirus pandemic, the UK Financial Conduct Authority (FCA) sought clarification from the High Court as part of a test case (the Test Case), aimed at resolving contractual uncertainty around the validity of many BI claims. The Test Case was based on a representative sample of policy wordings. The High Court’s decision on the test case was subject to an appeal to the UK Supreme Court, which handed down its judgment on 15 January 2021.
Swiss Re was not a party to the Test Case and its own policy wordings were not therefore considered in the Test Case. However after the Supreme Court judgment was handed down Swiss Re reviewed outstanding claims or complaints against it relating to business interruption arising from the pandemic. Swiss Re has corresponded directly with its policyholders in every case where a claim or complaint was affected by the Supreme Court judgment.
On 13 July 2020 the Supreme Court ordered that declarations made by the High Court in the Test Case should be varied as set out in the Annex to the Supreme Court's Order. The declarations record the outcome of the judgments in the Test Case and declare whether the policies in the representative sample potentially cover business interruption losses arising from the coronavirus (Covid-19) pandemic and in what circumstances. The FCA has said that it remains important to read the declarations alongside the Supreme Court judgment, which provides the Court’s reasoning and explanation that helps in understanding and applying the declarations.
The Supreme Court Order and the declarations in the Annex reflect the Supreme Court judgment and represent the final conclusion of the Test Case. Swiss Re is considering whether any outstanding claim or complaint under a Swiss Re policy is affected by the Supreme Court Order and the declarations, and it will contact any policyholders directly if their claims or complaints are affected.
Further information on the Test Case
Further information on the Test Case can be found on the FCA's dedicated Business interruption insurance web pages, here.
A copy of the Supreme Court judgment is available here.
The Supreme Court order and the directions made on 13 July 2021 can be found here.
As a starting point, and to help policyholders navigate the High Court and Supreme Court judgment and declarations in the Test Case, the FCA has made available a table of outcomes arranged by policy type and a table of declarations arranged by policy type. The application of the declarations to any particular policy will depend on the wording of the policy and the full judgments of the High Court and the Supreme Court, and the FCA has encouraged policyholders to speak to their insurance broker, legal advisers or insurer for questions arising.
Update: 20 January 2021: Judgment of the Supreme Court
The appeals were heard on an expedited basis at a hearing lasting four days from 16 November 2020. The Supreme Court's judgment, which represents the final resolution of the issues in the FCA's test case, was handed down on 15 January 2021. Following its judgment, the Supreme Court will shortly issue a set of declarations explaining whether and how the policies in the test case respond to business interruption losses arising from the coronavirus pandemic.
Following these developments, Swiss Re Corporate Solutions is now reviewing its own policy wordings to work out what the Supreme Court's judgment and declarations mean for claims and complaints under those policy wordings.
Swiss Re Corporate Solutions will be contacting policyholders whose claims or complaints may be affected by the Supreme Court judgment as soon as we can, to advise them of the result of our review and, where appropriate, to explain next steps.
More Details on the Test Case
Further information is available on the FCA's dedicated webpage.
Policyholders may also wish to sign up to receive email updates from the FCA on business interruption insurance and the FCA's test case.
How to Make a Complaint
If you have a complaint, please contact us in writing at the address below quoting your policy number or claim reference if appropriate.
Branch Manager, Swiss Re International SE UK Branch
Swiss Re International SE
UK Branch (Corporate Solutions)
30, St Mary Axe
London EC3A 8EP
We promise we will:
- acknowledge complaints promptly
- investigate quickly and thoroughly
- keep you informed of progress
- do everything to resolve your complaint fairly
- learn from our mistakes and use your feedback to continually improve our service
If your complaint cannot be resolved to your satisfaction and you are an eligible complainant (private individual or small business), you may refer the matter to the Financial Ombudsman Service (FOS) at the following address:
Financial Ombudsman Service
South Quay Plaza
183 Marsh Wall
London E14 9SR
Email: [email protected]
Learn more about business interruption insurance complaints issued by the Financial Ombudsman Service.