All participants in the housing industry are grappling with the effects of COVID-19, from borrowers to originators to servicers. The emergency has influenced all facets of the mortgage origination and servicing business, prompting additional restrictions in some instances while triggering flexibilities and relaxed requirements in others. Flood insurance requirements, which are usually strict and inflexible,
Update – US Federal Payments to Hospitals For Treating Uninsured COVID-19 Patients
On Friday, April 3, 2020, the administration announced that the US federal government would compensate hospitals and other providers treating uninsured COVID-19 patients at Medicare rates. Health and Human Services Secretary Azar said:
“Under the President’s direction, we will use a portion of that funding [CARES Act] to cover providers’ costs of delivering COVID-19 care for the uninsured, sending the money to providers through the same mechanism used for testing.”
When making this announcement, the Secretary stressed that providers would be paid at Medicare rates and would be forbidden to balance bill any covered person. Although asked, Azar did not clarify whether government funds would be available for treating undocumented persons. Azar promised that regulations explaining how this would work would be released soon.
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Temperature Screenings May Trigger the California Consumer Privacy Act’s Notice Requirements
As the COVID-19 pandemic continues to spread across the globe, in an effort to reduce the risk of transmission of the illness, many companies are administering mandatory temperature screenings to all employees and visitors prior to permitting entrance to their facilities. On April 9, 2020, the US Equal Employment Opportunity Commission (“EEOC”) issued updated guidance titled “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws .” In this updated guidance, the EEOC advised employers that they may implement employee temperature screenings in response to the COVID-19 pandemic without violating the Americans with Disabilities Act’s (“ADA”) “because the CDC and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions.” The EEOC further explained that employers may maintain a log of the results of temperature screenings and may store such medical information in an employee’s existing medical files, provided that it is stored separately from the employee’s personnel file, thus limiting access to this confidential medical information, as required by the ADA.
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Insurers May Not Cover Business Losses Related to Hong Kong’s Shutdown Orders After Lessons from Sars Outbreak
Companies affected by the Hong Kong government’s shutdown orders during the coronavirus pandemic are unlikely to win business interruption insurance or force majeure claims after a record payout in the past health crisis, experts said.
Depending on the exact wording of the policy, the triggers for coverage are that there must be the closure of
Business Interruption
In response to the COVID-19 outbreak, the UK government has announced that many businesses must close. The government’s previous approach had been to recommend – but not mandate – closures of certain businesses including social hubs such as restaurants and pubs. This had given rise to criticism that in restricting trade for those businesses whilst not compelling their closure, the government’s actions were causing business interruptions, without creating the conditions that would enable the affected businesses to make insurance recoveries.
Even now that the government has changed its approach, the ensuing business interruption losses are unlikely to be covered by standard business interruption policies. As the Association of British Insurers (ABI) has recently confirmed, the majority of such policies require physical damage at the property which prevents the business from continuing to trade. Individual businesses may well have purchased extensions to standard business interruption cover, for instance in respect of losses resulting from notifiable human infections or contagious disease. However, whilst COVID-19 was classified as a notifiable disease on 5 March 2020, a number of common disease extensions are not triggered on this basis, but rather specify the diseases in respect of which cover is provided. If so, they would be unlikely to provide cover in respect of COVID-19. This would, of course, depend upon the specific policy wording.
Who or What Is an “Essential” Business or Service That May Be Exempt from Shelter in Place or Stay at Home Orders?
In response to the COVID-19 outbreak in the United States, all 50 states, Puerto Rico, and the District of Columbia have adopted certain measures intended to encourage “social distancing” in an effort to limit human contact and thus slow down the spread of the virus. Cities and states have adopted various measures to try to achieve this goal, including by closing schools and/or limiting or prohibiting large gatherings (such as by cancelling concerts, plays, museums, and eating in restaurants and bars). Some governments are also acting to protect people who get sick and cannot work or who are laid off. Several states have recently taken even more aggressive action.
In just the last week, some jurisdictions have issued orders advising their residents to stay in their homes (i.e., “shelter in place” orders). Other states have imposed strict limits on which businesses can remain open and/or have imposed requirements that “nonessential” workers stay home. As of now, these types of restrictions are in effect in, among other places, California, New York, Illinois, Ohio, Pennsylvania, New Jersey, and Connecticut. At present, these types of orders reach one in four Americans. As a result, businesses and workers have been confronted with the critical issue of whether they can operate and who, if anyone, can leave home to work on premises.
These actions are similar to many of those that have been taken by other jurisdictions, such as in China, Italy, and France. As governments have imposed these tight restrictions, they have also recognized the need to allow certain businesses to continue to operate as necessary to provide essential goods and services. These orders have been imposed quickly, responding to the immediate needs of each community, and thus neither the orders nor the exemptions to the orders allowing certain activities to continue are consistent across jurisdictions or always well-defined.
This Update provides guidance on the scope of essential services or businesses in five US jurisdictions that have adopted restrictive measures to fight the spread of the virus: CA, NY, IL, OH and PA. Alerts covering additional jurisdictions across the globe, and updates regarding these jurisdictions, will follow.
Louisiana Restaurant Files First Lawsuit Seeking Business Interruption Insurance Coverage for COVID-19–Related Losses
As COVID-19 continues to spread exponentially around the world, individuals and businesses alike are struggling with the social and economic fallout of this pandemic. To protect the public, governmental bodies worldwide have enacted emergency mitigation measures, up to and including complete quarantine and “shelter-in-place” mandates. Several US cities and states have ordered non-essential businesses—such as gyms and bars—to close, and limited restaurants to take-out or delivery only. As a result, businesses face losses from decreased patronage, supply chain disruptions, employees stuck at home, and an increasing frequency of voluntary and involuntary closures.
Continue Reading Louisiana Restaurant Files First Lawsuit Seeking Business Interruption Insurance Coverage for COVID-19–Related Losses
COVID-19 and the Warranty & Indemnity Market
As the spread of COVID-19 accelerates, and as governments ramp up their response to increasing cases of COVID-19, every sector is assessing the impact of the novel COVID-19 virus on their business. Here, we consider how COVID-19 might impact the warranty and indemnity insurance market and what considerations may come into play for operators in this space.
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COVID-19 – Reinsurance
COVID-19 has potential to generate significant insurance claims worldwide, not only from more obvious covers such as life, trade credit, business interruption, event/contingency and travel, but also from employers’ liability, public liability or D&O covers.
The scale of losses being faced by businesses is dramatic and beyond most expectations – such losses have potential to devastate the balance sheets of insurers. Faced by such sizeable losses, it seems inevitable that insurers will seek to maximise use of their reinsurance programs, including by seeking to aggregate losses to the fullest extent possible. That might be achieved (at least on London market wordings) by arguing that COVID-19 is a ‘cause’ of their losses (on cause-based wordings) or that the outbreak is an ‘event’ (on ‘event’ or ‘occurrence’ wordings – if the outbreak is said to have started in a particular place at a particular time, from which losses flowed – perhaps a more challenging position for reinsureds). Reinsurers should be prepared for the possibility of claims being notified to layers of reinsurance that may never have been intended to respond to such losses.