Coronavirus Was an Act of God ⚡

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Coronavirus Was an Act of God

If you lose something that is insured, conventional wisdom says you make a claim, and recover the losses. It’s what Berkshire Hathaway, Progressive Corp., and Allstate offer the world, a backstop, protection, but now asked to foot the bill for the almost end of the world, and we have a stalemate; none of these insurers want to cough up. “It’s an act of God!”

Hurricane Katrina generated an insurance payout of $54 billion. 9/11 generated a payout of $40 billion, and litigation professionals tell us the coronavirus bill could surpass $80 billion.

The sector just didn’t expect so many phones to start ringing at once. The pandemic has been like a rogue wave that’s taken out the entire populous. If it doesn’t bankrupt the claimants, it’ll bankrupt the insurers, hence their argument that offering coverage here would be like pissing into the wind. It would destroy the insurance industry; which no one can afford.

It’s actually been in the small print for some time; people and businesses cannot and do not get indemnification from virus contamination. The markets believe it, as we can see by money flowing into insurance stocks, but standing by the side of insurance companies can only be possible with your back turned on an economy full of claimants. You can’t be bullish on both.

There’s uproar about this, though. There have been hundreds of lawsuits brought against “unreasonable” insurers with “unreasonable” policies, so far with scant success, but a Pandemic Risk Insurance Act on Capitol Hill is close to being passed so that the federal government can shoulder the losses.

Chubb, the insurance giant, is notably in favor, and excited for new clients deciding to take out insurance in wake of the crisis. The battle being fought now concerns who can afford to pay what. It could be an emotional and ruthless argument, investors at the heart of it!

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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