In the latest coronavirus-related lawsuits to be filed against insurers, two Oklahoman tribes are going to war with carriers including AIG and Lloyd’s over whether the business interruption of their casinos is covered under their policies.
The Chickasaw and Choctaw nations filed separate lawsuits in Oklahoma district courts on Tuesday (24 March) seeking declarations that financial losses to their casinos and other businesses caused by the outbreak are covered by their insurance policies.
The Chickasaw and Choctaw complaints state they bought multiple policies that provided “all risk” benefits.
The two lawsuits name the same insurers as defendants: AIG unit Lexington, various Lloyd’s underwriters, OneBeacon’s Homeland Insurance, Hallmark Specialty, Endurance Worldwide (Sompo International), Arch Specialty, Markel’s Evanston Insurance, Allied World, Liberty Mutual and XL Insurance America.
The tribes last week temporarily closed their casinos and other business including restaurants to help mitigate the spread of Covid-19.
“As a result of this pandemic and infection, the Nation’s property sustained direct physical loss or damage and will continue to sustain direct physical loss or damage covered by the policies, including but not limited to business interruption, extra expense, interruption by civil authority, limitations on ingress and egress, and expenses to reduce loss”
The complaints claim property sustained physical loss or damage that would trigger BI coverage
The lawsuits both state: “As a result of this pandemic and infection, the Nation’s property sustained direct physical loss or damage and will continue to sustain direct physical loss or damage covered by the policies, including but not limited to business interruption, extra expense, interruption by civil authority, limitations on ingress and egress, and expenses to reduce loss.”
The complaints say that all of these losses and damages are covered by the policies.
The Native American gaming community has requested $18bn of federal aid because of the hit to their casino revenue from the outbreak.
These two lawsuits are among the first of many expected to be filed challenging whether business interruption losses from the pandemic can be excluded by insurers.
Lloyd’s also sued in New Orleans BI case
Last week what was believed to be the first US lawsuit over business interruption coverage related to the coronavirus pandemic was filed.
In that case, a New Orleans restaurant sued certain Lloyd’s underwriters seeking declaratory judgment that its all-risk insurance policy does not contain an exclusion for viral pandemic and that the policy will cover any future civil authority shutdowns due to physical loss from Covid-19 contamination.
The Oceana Grill restaurant is seeking coverage for losses resulting from the Louisiana governor’s proclamation banning gatherings of 250 or more people in a single space, as well as an edict from New Orleans’ mayor requiring restaurants to close at 9pm and limit seating capacity to 50 percent. The complaint – titled Cajun Conti et al v Certain Underwriters at Lloyd’s of London et al – alleges that the restaurant’s policy “does not provide any exclusion due to losses, business or property, from a virus or global pandemic”.
The lawsuits come against a background of US lawmakers applying pressure on the industry to waive communicable disease exclusions in policies and pay out on business interruption claims from businesses that have been shuttered or otherwise impacted by the Covid-19 crisis.
The insurance industry has responded by saying such a move would threaten its stability, and potentially lead to bankruptcies because of the potential size of economic losses suffered by businesses.
As this publication reported, the Reinsurance Association of America is working with other industry trade bodies on a proposal to create a Federal Business Interruption and Workers Compensation Fund to help small businesses and aid employee retention through the coronavirus pandemic.
In addition, last week the New Jersey legislature attracted a lot of attention when it introduced a bill that would force insurers to cover business interruption losses related to the pandemic despite any exclusions in policies. That bill was temporarily pulled but sources suggest it will be voted on today.