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Law360, London (April 2, 2020, 11:38 AM BST ) Reinsurers have introduced specific policy exclusions over losses linked to the coronavirus outbreak for April 1 global renewals, broker Willis Re said, as the industry moves to minimize its exposure to the growing economic crisis.
Willis Re said in its latest market review on Wednesday that some reinsurers were able to insert exclusions into policies before they renewed them for another year. But in some cases they met resistance from clients.
The observation came as the broker set out its "first view" of reinsurance renewals for global markets, which take place on April 1. Reinsurance renewals for the London reinsurance market took place on Jan. 1.
James Kent, chief executive of Willis Re, said reinsurance policies that were drawn up well in advance of the due date "have been completed without any COVID-19-specific exclusionary language."
"For those programs that were not completed well in advance, several reinsurers sought to impose COVID-19 exclusions," he added.
Kent said in some cases reinsurers were able to insert exclusions, but that in other cases buyers agreed to submit a "letter of intent" formally recognizing that their policies did not offer cover over coronavirus losses.
Turning to the US market, Willis Re said some reinsurers agreed to provide cover only if there were COVID-19 or communicable disease exclusions in place. But the broker added that this was "by no means universally accepted" by clients.
The news comes as insurers have come under pressure. Some companies are under fire for withdrawing cover from some product lines or introducing exclusions.
On Friday, lawmakers in New York introduced a bill that would force insurers to retroactively cover claims for business interruption from COVID-19, even if the policy did not originally insure against closure from an infectious disease or had specific exclusions.
Similar bills have also been introduced in Ohio and New Jersey, causing the U.S.-based National Association of Mutual Insurance Companies to warn over "irreparable harm done to contract law" and the prospect of widespread insolvencies across the insurance sector.
--Editing by Ed Harris.
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