The COVID-19 Pandemic still rages unabated in April 2020, affecting lives, businesses, individuals and industries worldwide.
Many countries worldwide have imposed country wide lockdown which effectively shuts down businesses except for essential businesses. Apart from causing staggering fatalities, infections worldwide, the Pandemic also affects businesses, livelihood in many ways that will change the world forever.

The Malaysia Government announced on Mar 25, 2020, the Movement of Control order (Restricted Movement) for whole Nation will extend from 31st Mar 2020 to 14th Apr 2020. This order is made under the Prevention and Control of Infectious Diseases Act 1988 and the Police Act 1967.
This article discusses the Pandemic effects on the Insurance Industry.

General Insurance
I. Impact in Malaysia
The General Insurance Association of Malaysia (“PIAM”), and the General Insurance Association of Malaysia and The Life Insurance Association of Malaysia (“LIAM”), and the Malaysian Takaful Association (“MTA”) reaffirmed that the member companies remain open to support the policy holders.

Further, the industry has also made efforts to help affected people cope with the immediate health effects of the virus and the subsequent economic consequences whereby PIAM stated that PIAM, The Life Insurance Association of Malaysia (“LIAM”), and the Malaysian Takaful Association (“MTA”) has pledged an RM8 million contribution to establish a special fund for COVID-19 testing for medical insurance policyholders and medical takaful certificate holders.

In addition, PIAM addressed questions posed on general insurance protection in relation to this pandemic:

(a) Coverage by the Hospital and Surgical Insurance (“HSI”) – HSI policy covers cost of hospitalization and healthcare services including room and board, doctor and surgery fees, medical supplies and services, etc. due to covered illnesses or accidents. A standard HSI policy generally excludes all types of communicable diseases requiring quarantine such as the current COVID-19 outbreak. However, many Insurers, out of goodwill, have agreed to waive the exclusion and provide cover for COVID-19. This is in addition to extra coverage offered by individual Insurers.

(b) Travel Insurance – A travel insurance policy generally covers travel related accidents, medical expenses, inconveniences etc suffered during the period of travel as stipulated in the policy. However, most policies will exclude travel to countries where travel ban or advisory had been issued by the local or foreign government of the destination country.
As the terms and coverage of one policy may differ with another, consumers are advised to seek confirmation from respective Insurers before travelling.

(c) Motor Insurance – PIAM further addressed that all motor insurance shall be kept valid during the MCO period. Renewal of motor insurance can be done online.

II. Policy Coverage Concerns
Marsh has advised Insureds to review their requisite cover, particularly their Property Damage/Business Interruption (“PD/BI”) and Public Liability/Commercial General Liability (“CGL”) as these would be the policies most likely to have any applicability to the current situation.

Property Damage/Business Interruption (“PD/BI”)

(a) Falling Under The Definition Of “Loss”
Many modern policy forms in use in the market will contain an “infectious disease extension” clause (the
“ID Extension”) that will specifically write coverage for this event into the policy. Such clauses will add the closure of the insured’s business or premises due to an “order of a competent public authority as the direct and sole result of . . . any infectious or human contagious disease . . . ,” to the definition of “loss” for the purposes of business interruption cover.

(b) Closure Due To Governmental Order
Under an ID Extension, it is essential that the cause of the Insured’s business or premises being shut down is due to a governmental order. This is because coverage may not be afforded in the absence of such an order. As such, documentation of any governmental order must be obtained and preserved for use in establishing your insurance claim.

(c) Language
Certain policies where there is language which requires that the infection for which resulted in the closure of business or premises (again via government order) is actually “present” at the location or upon the premises Insured.

In such circumstances, Insureds must be certain of their language requirements and that they have adequate documentation from authorities such as:
a. When a closure is ordered;
b. That such a closure is the result of the authority finding that the virus is actually present in the vicinity/location

Thus, closing business as a precaution, without a virus actually being present, may endanger coverage. In this regard, insureds are advised to tread carefully.

(d) Measurement Of Trading Losses
Another complication is the measurement of trading losses as Insurers would likely factor in the wider reduction in trade across the country/region and seek to adjust any trading losses of an Insured against the current wider economic downward trends post virus outbreak.