Is Intact Financial Corporation concerned about lawsuits over operational losses due to business interruption caused by the COVID-19 pandemic?

Not according to the executives who shared their views in the conference call with financial analysts to announce the Q2 2020 results.

Senior VP, Claims, Patrick Barbeau, stated that 99.5% of their policies in commercial lines require direct physical damage from an insured peril to be triggered. The remaining 0.5%, have been paid and closed.

The insurer estimates the amount of these claims at $30 million to date. In fact, this amount is included in the provision the insurer set aside in Q1 2020 to cover losses linked to the pandemic.

“So not a lot of remaining uncertainty around that. But as expected, some groups of insureds and law firms have initiated litigation in Canada and in other jurisdictions as well, in an attempt to challenge this interpretation. But we continue to be very confident with our defense arguments and various levels of defense we have,” Barbeau explained. 

Courts rule

He adds that the courts began to make decisions regarding business interruption during the second quarter of 2020. He referred to two decisions in the US, one in Michigan and the other in New York. Barbeau pointed out that these two decisions involve language nearly identical to that of Intact.

“Both of those decisions have confirmed that, one, physical damage to the property is necessary to trigger BI coverage and, two, that the pandemic itself or a government‐mandated closure of businesses cannot be considered as physical damage to the premises

So here in Canada, none of these class actions motions have been certified yet, but we are actively preparing our defense and I’m very confident with our position,” he said. 

Intact CEO Charles Brindamour said he was more confident in the insurer’s position at this moment than he was in the first quarter of 2020.

Intact executives discuss 4 key issues

August 11: The COVID-19 pandemic

August 12: The hard market - PRO​

August 13: Artificial intelligence and benefits - PRO​

August 14: Business interruption - PRO​