Standard & Poor’s said it does not expect state legislators to succeed in their efforts to retroactively expand business interruption insurance coverage for COVID-19-related losses.
The reason: An expectations of fierce insurance industry-fueled legal challenges.
“We are taking the initial standpoint that these political efforts to retroactively change policy language will not materialize,” S&P Global Ratings credit analyst Tracy Dolin said in prepared remarks.
S&P outlines its perspectives on the issue in a new report: “How COVID-19 Risks Factor Into U.S. Property/Casualty Ratings.”
Efforts by multiple states and other civil suits to force retroactive COVID-19 retroactive business will be stymied by both constitutional and legal challenges, S&P said. S&P Global Ratings credit analyst Lawrence Wilkinson added in prepared remarks that government intervention to help insurers meet any retroactive obligations would be the only way this could happen successfully.
Chubb Chairman and CEO Evan Greenberg is among property/casualty insurance industry leaders who has promised to fight efforts in the courts and elsewhere to force retroactive business interruption cover for COVID-19, pledging the industry will fight this “tooth and nail.”
Should such efforts succeed, S&P said that P/C insurers could see their creditworthiness drastically affected for the worse.
“Absent a government backstop, enactment of such policies would likely present a solvency issue for the sector,” S&P said.
The insurance industry, along with retail, hotel and other segments, is promoting an insurance plan backed by the federal government that would help businesses that in the future suffer losses from a pandemic. The plan would be similar the government-supported commercial terrorism products after the attacks of Sept. 11, 2001.
Source: Standard & Poor’s