From questions about business interruption policy coverage spurred by the COVID-19 pandemic to property damage due to civil unrest, as well as major lawsuits and state regulatory action, it has been a busy year for insurers in the East region.
Here's a look back at the most notable topics covered in Insurance Journal's East region this year:
Business interruption insurance
As the COVID-19 pandemic this year drew a lot of attention from readers of the Eastern region, a perhaps lesser-known type of insurance came into the spotlight, which became known to many: business interruption insurance (BI).
This type of insurance covers loss of income in some cases if a business cannot operate due to an event that causes physical damage to the property, such as a fire or a hurricane. Policies typically require physical damage to be present, and most policies specifically exclude losses from viruses, fungi, or bacteria.
This became a point of contention this year, however, as many companies first faced state-mandated shutdowns due to a pandemic, with some companies voluntarily closing their doors for the safety of employees and customers. Proposed legislation began to pop up in several eastern states, starting with New Jersey and quickly spreading to Massachusetts, New York, and Pennsylvania, which would require insurers to cover COVID-19-related BI losses despite virus exclusions in their policies .
While none of the bills were passed as proposed, they raised questions about the constitutionality of this type of legislation, the financial stress insurers could tolerate it if necessary to cover virus-related risks and exactly how an industry makes many of its efforts forecasting risk can respond to something as unprecedented as a global pandemic.
In New York, the Department of Financial Services instructed insurers to provide details of the business interruption policies provided to policyholders, as well as the coverage each policy provides in relation to COVID-19, in an effort to facilitate communications between insurers and their improve and obtain more clarity. on this matter.
BI lawsuits also began to crop up, with popular seafood restaurant chain Legal Sea Foods going to court in May in an attempt to get the insurer to pay for its business interruption losses after it was shut down due to the coronavirus and food restrictions.
In Pennsylvania, the state's Supreme Court also ruled in May that COVID-19 was no different from other natural disasters because they all involve "significant property damage, deprivation, suffering or possible loss of life."
The court ruled that because the virus is spread from person to person, has an incubation period of up to 14 days, and can live on surfaces for up to four days, every location, including an individual business, is in a disaster area. and is thus damaged. The ruling raised concerns that it could override one of the insurance industry's standard bases for denying BI coverage – the physical damage component.
The COVID-19 pandemic
This year, insurance regulators across the Eastern region have provided guidance to the industry on how best to respond to the ongoing coronavirus pandemic.
One of the first steps in New York was Governor Andrew Cuomo's announcement on March 6 regarding the agreement of six international and national insurance companies to offer a travel policy for 'cancel for any reason' in the state. .
In the summer, as the pandemic was in full swing, a report from the New York State Department of Health (NYSDOH) found that the coronavirus outbreak affecting nursing homes across the state may have been caused by staff and visitors unknowingly causing residents at the beginning of the pandemic.
While something that has become known as & # 39; quarantine fatigue & # 39; As COVID-19 continued to reverse fall and winter plans and cause financial damage to small and medium businesses in particular, states began to grapple with businesses opening despite mandatory closings. . In a crackdown on the weekend of October in New York City, 62 tickets worth more than $ 150,000 in fines were handed out to violators of newly imposed restrictions in coronavirus hotspots.
In Pennsylvania, Governor Tom Wolf warned companies choosing to open despite the pandemic's closure, saying they could jeopardize their insurance coverage. Following Wolf's warning, Jessica Altman, Pennsylvania Insurance Commissioner, reminded companies of the risks and increased liability they could face if they fail to comply with the shutdown order.
Pennsylvania corporations could still be held liable if employees or customers contract COVID-19 on the property, as Pennsylvania Governor Tom Wolf vetoed a bill this month that would restrict liability protections from COVID-19-related lawsuits for several companies and entities would have expanded. in the state.
House Bill 1737 was initially introduced by members of the Pennsylvania House of Representatives and later amended by the Pennsylvania Senate, seeking immunity from COVID-19-related lawsuits for a wider range of businesses, such as restaurants and nursing homes. A press release from Wolf's office stated that the bill proposes "too broad immunity from civil liability as a result of the pandemic."
In Minneapolis, where Floyd's arrest by police officers on May 25 was fatal, demonstrations of police brutality and racial inequality sparked and quickly spread to other US cities, including Eastern region cities such as New York, Pittsburgh, Boston and Washington DC . readers were all eyes as peaceful protests during the day were overcome by violence at night, as criminal activities such as looting, arson and vandalism led to property damage and curfews in some cities.
The Property Claims Service, part of the Insurance Services Office, labeled this a catastrophe as it was expected to hit the threshold of more than $ 25 million in losses, according to I.I.I.
Set across the Eastern region, these scenes also served as a grim reminder to the insurance industry of civil unrest that took place in New York and other US states over 50 years ago.
From April 4, 1968, riots broke out in New York and other states in the U.S. after the murder of Martin Luther King Jr., an event commonly referred to as the Holy Week uprisings, resulted in 43 deaths, thousands of arrests, and millions of dollars in property damage, Smithsonian Magazine reported.
The Insurance Information Institute (I.I.I.) estimates that the king's murder riots in New York caused $ 4 million in losses to the state's insurance industry, which equates to $ 30 million today. I.I.I. ranks it in the top 10 most expensive U.S. civilian illness for the insurance industry, a ranking Larry P. Schiffer, senior partner in Squire Patton Boggs's New York office, told Insurance Journal in June that civil unrest over George's fatal arrest Floyd could measure up to.
"This is likely, if not the largest, one of the largest insurance losses caused by riots, vandalism and commotion in US history," he said.
Lawsuits in the Eastern Region
In addition to the pandemic and civil unrest that continued to dominate headlines for most of the summer, readers of the East region also paid close attention to several notable lawsuits this year.
The Massachusetts Supreme Court ruled in March that an insurer is responsible for paying liability claims arising from the improper use of a portable generator, despite an exclusion of uninsured properties in the insured's homeowner policy. This came after four people died from carbon monoxide poisoning in an uninsured Mark Wakelin cabin. The cabin had no electricity and it was determined that a portable generator that Wakelin had left in the cabin had been improperly used indoors by the victims to power a small refrigerator.
Also in March, the Virginia Court of Appeals upheld a decision by the Virginia Workers' Compensation Commission that occupational accidents cannot be awarded to a truck driver who is injured in an accident after failing to wear a seat belt. This decision came after plaintiff Parker Mizelle appealed the Commission's decision, claiming that it was incorrect to hold that he could not suffer industrial accidents because his injuries were caused by deliberately not wearing a seat belt.
In May, a New Jersey appeals court upheld a court ruling that Chubb Insurance Co. is not responsible for damage to the homes of two policyholders caused by Superstorm Sandy due to a flood exclusion in their policies.
Former Liberty University (LU) president and chancellor Jerry Falwell Jr. filed suit against the school in October for reputational damage following his August dismissal, according to a complaint filed with the Commonwealth of Virginia Circuit Court for the city of Lynchburg. The complaint alleged that LU leaders are not lying about Falwell Jr. which led to his resignation after serving as president of the university for 13 years. It also claimed that the university had subsequently campaigned to damage its reputation and family heritage.
Later in the year, a former Starbucks Corp. barista complained. in New Jersey in November, claiming she had been illegally fired for not wearing a "PRIDE" t-shirt, which she said was contrary to her religious beliefs. Betsy Fresse said her dismissal in August 2019 from a store in Glen Ridge, New Jersey, near her Newark home, for alleged violation of the & # 39; core values & # 39; of Starbucks amounted to illegal religious discrimination under the federal civil rights law.
New York Ordinance
As was the case in previous years, regulatory action in New York was also a topic of interest to Eastern region readers, beginning in July when the New York State Department of Financial Services (DFS) filed cybersecurity charges against title insurer First American for exposing millions of documents containing consumers' personal information.
The charges were the first to be filed under the DFS Cybersecurity Ordinance, Part 500 of Title 23 of the New York Codes, Rules and Regulations, which went into effect in March 2017 and were implemented on a two-year phased timeline.
In September, DFS Chief Inspector Linda Lacewell implemented several new initiatives to address climate-related financial risks, calling on insurers to integrate these practices into their risk management and business strategies.
The move came amidst the annual New York Climate Week climate summit, which was underway from September 21-27, and ahead of the U.S.'s Nov. 4 anniversary that formally began its withdrawal from the historic Paris climate accord. 2015 last year.
This fall, a coalition of corporate advocacy and local government groups has again called for reform of a New York law that has been on the books since the late 1800s. Sections 240/241 of the New York State Labor Act, known as the Scaffolding Act, makes contractors and property owners engaged in construction, repair, or demolition work 100% liable for gravity-induced injuries, despite the gross negligence of the injured workers, such as not using proper safety equipment.
The coalition, which includes more than 75 member organizations, such as contractors and various trade groups, wrote a letter to New York Governor Andrew Cuomo on Sept. 29, calling for the lifting of this absolute liability standard under the Scaffold Law.
Finally, DFS closed a three-year investigation and entered into a settlement with the National Rifle Association (NRA) in November to resolve alleged violations of New York's insurance law. The settlement includes a fine of $ 2.5 million and means that the NRA will not be able to conduct insurance business in New York for five years, regardless of whether or not it receives an insurance license during that time.
Do good in times of need
While it's safe to say that 2020 has seen many ups and downs, the insurance industry has nevertheless done a lot of good.
In the East region, William A. Smith & Son Insurance was nominated by his staff and won Insurance Journal's annual Best Agency to Work For Gold award. The employees, who completed an anonymous survey as part of the nomination, said this honor is well-deserved because of the agency's family-oriented atmosphere.
"We really care about our clients and want win / win relationships," said Jack Smith, executive vice president and owner of the independent agency headquartered in Newburgh, N.Y. "It's not just about how we are doing. We've been in the business for 90 years. We want to make sure everyone is served and that they feel good doing business with us."
Convelo Insurance Group, lead insurer based in N.J., Tinton Falls, has been in business for nearly two years and continues to focus on the non-profit sector, which has been hit hard by the pandemic this year.
"Insurance is a fundamental tool in our economy," said founder and CEO Josh Lamberg in a December interview with Insurance Journal. “It offers the opportunity to make someone healthy in case of loss. Nonprofits, however, are going through an extremely tough market as they seek to serve the most vulnerable in our country. The impact of the hard market has been exaggerated by the impact of the pandemic. "
Lamberg said the ability to help the most deprived in the community, especially as the challenges facing nonprofits have worsened this year, makes his job at Convelo one of the most rewarding to date.
“When we go home at the end of the day, we feel good,” he said.
At the annual Northeast Benefit Event, which will be held on December 9 virtually this year, The Insurance Industry Charitable Foundation (IICF) raised more than $ 880,000. The event brought together more than 380 insurance professionals and leaders in philanthropy for a virtual evening celebrating year-round charities and volunteering while raising money to continue to give back to the community, according to an IICF press release.
Betsy Myatt, executive director of the IICF Northeast Division and IICF vice president and chief program officer, said while the benefit has become a holiday tradition in which virtual rather than face-to-face meetings were a big change this year due to the COVID-19 pandemic, inspired by the turnout for the celebration and the generosity of IICF & # 39; s affiliates, event sponsors and insurance industry professionals, especially at a time when the pandemic has created even more challenges for vulnerable communities.
"I think it really speaks to the insurance industry at its best," she told Insurance Journal.
Happy New Year and thank you for reading Insurance Journal this year.