The head office of the Caisse Desjardins is seen on Wednesday February 24, 2021 in Montreal LA PRESSE CANADIENNE / Ryan Remiorz
Insurance experts say consumers can expect more companies to introduce exclusions around COVID-19 after Desjardins dropped its liability and property damage coverage from communicable diseases.
In an undated letter to customers, the Montreal-based company said it would not cover them in the event of a lawsuit for the spread of a communicable disease, nor would it cover the costs of decontamination or property damage related to those diseases.
Desjardins public relations advisor Jessica Spina said the policy change came after the reinsurance market started using communicable disease exclusions.
“Therefore, we wanted to define communicable diseases in our policy wording,” she said in an email.
The Insurance Bureau of Canada, which represents the country’s insurance agencies, said the international reinsurance market has added these exclusions with Canadian insurers because the risk of a pandemic is too widespread to be reasonably insured.
“In general, the risk of a pandemic is not insurable because the insurance industry is… unable to diversify this risk because it affects everyone at the same time,” said Vanessa Barrasa, spokesperson for IBC.
Insurance experts across the country say they expect other providers to introduce similar exclusions into their coverage, depending on the level of risk they’re willing to take.
“The name of the game in the insurance industry is to try to estimate risk accurately,” said Ian Lee, associate professor trained in insurance at Carleton University.
“It is very difficult right now to estimate the overall risk when the pandemic is mutating and coming up with different versions, and public health opinions on how to deal with it differ.
That’s why some insurers will want to wash their hands of certain aspects of COVID-19 coverage, Lee said.
The CIB said the pandemic presented challenges for insurance companies, especially as the pandemic coincided with a costly year for weather-related claims.
He said Canadian insurance companies paid $ 2.4 billion in 2020, although it is difficult to say whether all providers have been negatively affected due to the different risk profiles that insurers adopt.
James Colaco, who heads the insurance industry practice at Deloitte Canada, said some companies like auto insurance providers have actually benefited from the pandemic as most people continue to pay their premiums by driving less. , thus submitting fewer complaints.
But he said suppliers who deal with small businesses have been hit hard after COVID-19 lockdowns led to many businesses filing claims for business interruption payments.
Anne Kleffner, a professor at the University of Calgary specializing in insurance and risk management, said the picture is hazy about what insurers will and will not be required to pay to surround the pandemic.
She pointed out that some insurance companies have been able to avoid paying small business interruption claims, since some of these deals are based on property damage, which was not a factor during the pandemic. .
Kleffner and Colaco said it would be interesting to see if courts forced insurance providers to pay pandemic-related claims in the years to come, such as commercial or liability claims.
“When insurers have to deal with the letter of the policy rather than the public issue, things invariably get thorny,” Colaco said.