Major League Sues Insurers Over Chinese Flu Losses

“We strongly believe these losses are covered in full by our insurance policies, and are confident that the court and jury will agree.”

Major League Baseball sues insurers over pandemic BI losses

8th December 2020 – Author: Matt Sheehan

As the legal battles over the status of business interruption (BI) claims connected to the pandemic continue to play out, Major League Baseball (MLB) has announced that it intends to sue its insurance providers.

The League and all 30 of its teams plan to file a lawsuit against their insurers over the issue, according to reports from AP News.

The sport has lost billions of dollars over the 2020 season, which was played almost entirely without spectators due to the COVID-19 pandemic.

MLB argues that its providers – AIG, Factory Mutual and Interstate Fire and Casualty Company – have refused to pay out on legitimate claims made under its ‘all-risk’ policies.

But industry campaign the Future of American Insurance & Reinsurance (FAIR) contends that no physical damage was caused to stadiums or facilities, so insurers are not obligated to pay out.

So far, most legal cases in the US have agreed with the point made by FAIR, but UK courts largely sided with policyholders in the landmark BI test case brought forward by the FCA.

“Due to COVID-19, the Major League Baseball entities, including those of the 30 major league clubs, have incurred significant financial losses as a result of our inability to play games, host fans and otherwise conduct normal business operations during much of the 2020 season,” MLB said in a statement to the AP.

“We strongly believe these losses are covered in full by our insurance policies, and are confident that the court and jury will agree.”

According to the University of Pennsylvania Carey Law School, more than 1,400 lawsuits have been filed against insurers over the issue of pandemic BI claims, including from several minor league baseball teams.

MLB’s suit, which was filed in California in October, argues that the presence of COVID-19 “has caused and will continue to cause direct physical damage to physical property and ambient air at the premises.”

“Coronavirus, a physical substance, has attached and adhered to Plaintiffs’ property and by doing so, altered that property,” it adds. “Such presence has also directly resulted in loss of use of those facilities.”

But re/insurers maintain that BI policies were never intended to cover losses of this magnitude, which they say should instead be taken up by the government.

“Only the federal government has the financial capacity to provide the relief that small and large businesses need to weather this crisis,” FAIR said in response to the MLB’s lawsuit.

“Insurance premiums were not priced to account for a global pandemic. Insurers, the backbone of the global economy, would be bankrupt if they paid for all the pandemic-related claims they did not collect premiums to cover,” the campaign body continued.

“Litigation battles concerning business interruption policies that never were intended to cover global pandemics are only distracting from the true issue: There is a protracted need for a sustainable government-backed solution to provide relief to business owners today and protect them from similar situations in the future.”

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