Business interruption insurance in a post-coronavirus world

Standard business insurance may not compensate businesses for the lost revenues that they incur as a result of Covid-19.

In insurance terms, the coronavirus likely represents a large protection gap, in which insurance covers very little of a large economic loss. Protection gaps are common in undeveloped countries (where insurance penetration is low) as well as in very high-risk lines of business such as residential earthquake insurance. However, it’s unusual for such a gap to occur with typical business insurance policies.

To stay relevant, the insurance industry must address this protection gap, creating products that address indemnity needs in the event of a public health crisis.

This blog highlights why insurers that can offer new business-interruption coverages for future pandemics will succeed in both fulfilling market needs and creating new sources of growth for the P&C industry.