Coronavirus insurance considerations

With the Coronavirus (COVID-19) outbreak comes an array of new and uncertain challenges for businesses across the globe, including within the world of insurance. SANDS have already been contacted by a number of insurers and insureds, with questions related to how the outbreak will potentially affect their businesses.
Monday, March 16, 2020

What on one hand constitutes an opportunity to recoup or limit losses for an insured could on the other hand constitute a potential exposure for insurers. SANDS’ Insurance Team are available on short notice, to assist with any questions related to potential or existing disputes on coverage. In the following you will find some insights on possible issues and exposures due to the Coronavirus, based on our experiences so far.

The Coronavirus outbreak has already had a huge impact on the global economy, and risk analysis and contingency planning may be needed and expected in order to reduce potential negative economic impacts the outbreak may have on a company. While the possibilities of physical meetings are hampered, professional liability continues to be in full effect. Directors and officers are expected to continue daily operations, e.g. through the different forms of remote meetings that applicable company regulations facilitate. As such, loss of company value, non-performance of contracts or other professional liability, may lead to questions within the financial lines sector with regards to coverage under Directors- and Officers- and/or Professional Indemnity Insurances.

Furthermore, projects may be delayed or cancelled as a result of the coronavirus. This could lead to discussions related to the scope of Project Insurances, Supply Chain- and/or Business Interruption Insurances, and Construction Guarantees. A common theme during such disputes have proven to be the application and implications of force majeure clauses/exclusions in the insurance contract, and in the underlying contracts of the project. Recourse possibilities may be limited due to increased occurrences of bankruptcies.

Within travel and aviation, we have already seen a large quantity of terminations and cancellations, resulting in claims under Travel Insurances. Many countries have recommended their citizens to return home from vacations, studies abroad etc., and early returns may be covered depending on the wording of the policy.

Many insurers also provide a variety of Cyber Insurance Products. Cyber criminals thrive in crisis situations and evidently know how to capitalize on the Coronavirus outbreak, as there are already reports circulating on numerous corona-related phishing scams. At the same time, cyber security measures may not be in place when working from outside the workplace, which makes remote workers key targets, thus increasing the risks associated with targeted cyber-attacks.

With regards to the timeline of an insurance incident from claim notification to a potential settlement, time limitations in accordance with the provisions of the Norwegian Insurance Contracts ACT (“NICA”) are largely relative and may therefore be extended due to these unusual circumstances. Settlements from the insurer are however generally not excusable due to employees working from home, and in our view applicable periods of interest will usually run as per usual.

While there certainly are some market standards and similarities across different policies, insurance policies are contracts subject to general contractual principles and the compulsory provisions of the NICA. SANDS Insurance Team has many years of experience from the industry, and as part of the SANDS 24/7 Corona Response Team we are ready to assist with any interdisciplinary challenges your business may be facing during these extraordinary times.

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Christian Kjellby Nesset
Christian Kjellby Nesset
T: +47 22 81 46 70
M: +47 419 16 656