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Law360, London (March 2, 2020, 6:31 PM GMT ) Specialist insurer Hiscox said Monday it has begun to receive claims relating to the coronavirus outbreak, with event cancellations a potential area of exposure, as governments have started to ban large public gatherings.
In a results update, Hiscox said it was still too early to tell the potential impact of the virus on its business, but said insurance for a pandemic is only covered in a "very small part of the portfolio."
The virus has now infected more than 88,000 people around the world and killed 3,000. Major trade events have been canceled, manufacturing supply chains have faced disruption and last week saw the worst weekly trading in stock markets since the 2008 financial crisis.
"It is too early to estimate the impact of the coronavirus," Hiscox said. "The main areas of potential exposure for Hiscox are event cancellation, travel and personal accident cover and we have received notifications of small claims to date."
Financial analysis company Moody's said Monday insurers were not only likely to face losses in the form of claims, but on solvency ratios, which are sensitive to volatility in financial markets.
"Sharp deterioration in financial markets over the past week will weigh on insurers' profitability and capitalization," said Brandan Holmes, a senior credit officer at Moody's.
"Higher claims for certain types of insurance, including trade credit and event cancellation insurance," were also likely, Holmes said.
Most event cancellation insurance policies do not cover losses from communicable diseases like coronavirus, except where such coverage is sold as an add-on. Moreover, that coverage is often only triggered when the government stops the event from going ahead, rather than when the organizer decides to cancel or attendees drop out.
The Mobile World Congress was expected to see 100,000 attendees from 20 countries in Barcelona last week, but was canceled as dozens of exhibitors started to drop out. Conference organizers confirmed to Law360 last week that though they had insurance, losses were not covered by their policy.
Earlier reports suggested the organizers would have been able to claim on their events cancellation insurance if the Spanish government had declared a national health emergency prior to the event being canceled.
Conversely, the Geneva Motor Show, which was expected to go ahead later this week, was canceled after the Swiss government last week banned gatherings of more than 1,000 people.
Edel Ryan, head of entertainment insurance at broker Marsh JLT, said if more governments introduce bans on large public gatherings, that could lead to insurers being increasingly on the hook.
Even so, she said it was practically impossible for events companies to buy specific cover now to guard against cancellations over the coronavirus, whose official name is COVID-19.
"We've noticed from January most insurers have now introduced specific exclusions over COVID-19 in communicable disease cover," she told Law360.
--Editing by Marygrace Murphy.
For a reprint of this article, please contact reprints@law360.com.
