The moment I started worrying about Coronavirus

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Two weeks ago — the week of February 24 – two insurance carriers reached out to the RiskGenius team with the same question:

“Can you help us evaluate insurance policies for liability related to the Coronavirus?”

In my nine years of doing insurance software, we had never seen anything like this: two carriers ready to buy software in one week. If you have ever sold large enterprise software, you know that two-week contracts don’t happen, and two of them never, ever happen.

I’m not exaggerating when I say I got very worried during that week. We bought extra food and water. I started canceling trips. I wish I had cornered the market in hand sanitizer. I have never reacted this way to any other emerging risk.

Then we got to work at RiskGenius.

This first article is going to highlight why I think the coronavirus risk is going to be much worse than everyone realizes. In the next post, I will then highlight coverage issues that should be considered when evaluating coronavirus liability. Then we will start doing deep dives into insurance language that will be particularly relevant to insurance liability. All of this information is going to be included in a white paper. My hope is you can use this information to comprehensively review coronavirus liability in your insurance policies. Or you can just call RiskGenius and have it done accurately and quickly, like one of our customers who completed this analysis in one hour.

Thank you to my co-author, Cheri Trites Versluis, the Director of RiskGenius Policy Analysis, for helping me with this article. Who could have guessed that our coffees many years ago would lead to this moment in time?

Background on COVID-19

The Coronavirus, or COVID-19, is a respiratory illness, which is rapidly spreading and has a 1-3.4% mortality rate. If you want to read more about the coronavirus from a medical standpoint, I would recommend you read the Centers for Disease Control and Prevention website or the New York Times’ excellent coverage.

I am writing this on March 10, 2020 and we are just now seeing the impacts of this virus in the United States. My personal opinion is this will get much worse in March and April and that current numbers are vastly underrepresenting the growing problem in the United States. Here’s why:

Even with relatively low infection numbers being reported in the United States, the economic impacts are widespread. Consider the following that has happened already:

The coronavirus is significantly impacting businesses due to disruption in supply chains, mandatory closings, decontamination efforts, event cancellations, and overall decreased business. In early February, I was buying an iPhone for my wife. I casually asked an Apple employee if he was seeing a shortage of iPhones due to disruptions in the supply chain from China. He responded that they were stocked with phones but they were already running out of Apple accessories.

The point of this doom and gloom? I think the economic impact of the coronavirus is going to be much worse than the public anticipates.

With that said, as an insurance technology company, the RiskGenius team has been focused on potential liability in commercial insurance policies. Can airlines claim coverage for canceled flights or tickets? Can conferences claim coverage for canceled events (South by Southwest did not have insurance)? And what happens to the small businesses of an entire country that are rendered immobile?

In future posts, I am going to focus on how insurance may or may not cover events or actions triggered by the Coronavirus outbreak. It’s a weird moment in history, and I think RiskGenius’ technology is going to play an important part in understanding the insurance implications. I guess this is why I started this company — but it is weird none the less.