Insurers feel the heat as chefs, Trump join calls for payouts

[Eugene]

Source: Reuters

BUSINESS NEWS APRIL 24, 2020 / 10:20 AM / UPDATED 6 HOURS AGO

Insurers feel the heat as chefs, Trump join calls for payouts

Carolyn Cohn, Suzanne Barlyn, Noor Zainab Hussain
7 MIN READ

LONDON/NEW YORK (Reuters) - Daniel Duckett, owner of the Lazy Claire patisserie in Belfast, was hoping for an insurance payout of up to 100,000 pounds ($123,460.00) to cover losses during the coronavirus lockdown. Now he fears for the future as he battles for the compensation.

Duckett is one of thousands who have called their insurers to claim on business disruption policies as the spread of the new coronavirus forces large parts of the global economy to shut down, with the answer for most a straight “no”.

As the industry increasingly comes under fire, critics ranging from U.S. President Donald Trump to groups of celebrity chefs have joined the call for payouts to be made.

But insurers, already facing huge payouts on travel and trade credit insurance and the cancellation of sporting events such as the Wimbledon tennis championship, say clauses allowing claims due to government closures or communicable diseases often do not apply to the widespread lockdowns in place to stem the spread of the coronavirus.

Meanwhile, market volatility has also slashed normally comfortable investment income and if insurers were forced to make payouts on policies that do not cover the pandemic, “it would damage or destroy the insurance industry in a terrible way,” Evan Greenberg, CEO of Chubb, one of the world’s largest insurers, said this week.

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Read more: https://www.reuters.com/article/us-health-coronavirus-insurance-business/insurers-feel-the-heat-as-chefs-trump-join-calls-for-payouts-idUSKCN22628P

[Laelth]

1. Insurance can not handle a situation in which large numbers are affected.

Insurance is for low probability, high loss situations. That is where insurance, as a business model, works best. Homeowners insurance, for example, works. There is a low probability that your house is going to be completely destroyed, but a very high loss if this happens. So, people pool together to share the risk. They collectively compensate the unfortunate soul who actually suffers this colossal loss with their shared resources. That makes sense.

Health insurance makes no sense because it’s 100% likely that ALL PEOPLE need health care. In this scenario, there’s no low probability/high loss situation that insurance can fairly manage. At present, our system is designed to screw the poor out of health care to insure that the wealthy have it. The poor still pay for it. They just rarely get it.

We are now seeing a similar situation with Coronavirus damages. Too many people have been affected for insurance companies to compensate. The chef in the OP is just one example.

Whether we, the people, bail out insurance companies, AGAIN, is the question. Frankly, I think that we should let them fail.

-Laelth

[elleng]

2. Yes