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NO SURPRISES: HOW INSURERS AND THEIR CUSTOMERS BENEFIT FROM FINANCIAL EDUCATION

Insurers reacted quickly and effectively to the extraordinary extent of the hurricanes, forest fires and civil unrest in 2020. These events generate accumulated insured losses in the billions.

However, a recent Forbes article stated that the owners of one of Broadway’s largest theater chains were surprised that their insurance companies would fail to cover most of their losses during the COVID-19 pandemic. .

Our main goal at Triple-I is to make people more willing and more resilient. We strive to have every opportunity to inform customers about how their insurance works before they suffer an insured loss. Part of this mission explains how uninsurable epidemics are. In contrast to covered events that are limited in time and geography, epidemics affect everyone at the same time. We have explained this to legislators, lawyers, business media and consumers in briefings.

Solutions to big problems on a large scale

As a result, there is a consensus on the idea that the federal government is the only company with the reach and financial resources to help companies recover from a large-scale pandemic event. With this in mind, we help inform the public debate about the need for a role for the federal government in protecting the United States from future pandemics.

As insurers, regulators, and the U.S. government scramble to help businesses financially affected by future pandemics, we need to focus on the present. And to do this, we have to take a quick look at the past:

Insurance has been around for 350 years to help homes, businesses, and communities come together and recover from forest fires, hurricanes, and other disasters. Insurance companies are always there for their customers because they are. For example, in the months following September 11, insurers paid tens of billions of dollars to keep the affected companies alive as they rebuilt New York and Washington, DC from the rubble.

In 2020, insurance companies will continue to play their vital social role, covering insured losses from record times of hurricanes and forest fires, as well as the most devastating civil protests in more than a quarter of a century. . Insurance simplifies the somewhat complex risk management process and creates products that make it easier for people to be better prepared and more resilient. Covering these risks requires enormous capital resources.

Ask? Your policy documents contain the answers

Insurance is heavily regulated and, as Triple-I pointed out at the National Association of Insurance Commissioners (NAIC) annual summit in September, the industry we serve relies on strong collaboration with regulators and government agencies in different states. United to make the insurance work better. For each.

A tangible result of this partnership is something that literally anyone can achieve: insurance policy documents. Reading these materials to understand what to buy is an essential part of preparing.

Business income (service outages) or BI insurance losses as a result of a pandemic will not be covered as direct physical damage such as hurricanes or fires will trigger the outbreak. Standard BI policy. As many courts and scientists across the country have argued, neither the virus nor the bacteria cause direct material damage to the structure of the company. This contract language is well established; In addition, each policy is approved by individual countries before being released to BI document owners.

We think this works if no one is surprised what the insurance covers and what their insurance policies don’t cover. For this reason, Triple-I regularly encourages business owners to familiarize themselves with their insurance documents and to have regular conversations with their agent or broker to discuss anything they do not understand.

Ironically, at a time when we are all used to clicking the “Terms and Conditions” button, one can agree to ignore agreements. Sociologists see this as a form of cognitive dissonance: we know we should read our insurance policies, but very few of us do. This is the model of behavior that we are all responsible for, and Triple-I understands that there are so many demands on customer time.

This brings us back to a fundamental point, which is that insurance companies prioritize their efforts and resources to ensure that everyone knows the coverage they have and need.

Outbreaks are not insurable because insurance companies do not charge premiums to cover business losses due to viruses and other pathogens. Products are available for this purpose, but the vast majority of companies do not purchase them. These exemptions and the availability of pandemic insurance are known to many seasoned professionals, especially risk managers and litigators. Triple-I is willing to work with anyone to educate and prepare for the risks.

The next epidemic will certainly come. The way insurers, their customers and the federal government now respond will ensure that our resources and energies are used to save lives from all the threats that the United States faces.

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