The global pandemic has taken everything we know and turned it on its head. The insurance industry entered the new decade with stronger portfolios that reflected the bull market and stocks hitting an all-time high in addition to innovation driving more efficiency, predictability and risk mitigation. Today the industry is facing, legislative action to amend property policies opening-up a floodgate for business interruption coverage for which insurers have not rated, nor collected premium, mandatory extended grace periods for premium collection and cancellation in addition to the inevitable claims related to the pandemic. The precedent that might be set by legislative or regulatory action that materially changes an insurance policy and a carrier’s exposure is chilling.

At PLAN, we have considered where the fallout will land for our members in Professional and General Liability. In looking at the categories that are of interest, Coverage/Bad Faith, Professional Liability/E&O, Financial Institutions, Cyber/Cybercrime, D&O, ERISA/Fiduciary and EPL/Labor & Employment, here’s what we are seeing.


Coverage/Bad Faith

In the Coverage/Bad Faith arena we are seeing insurers scouring their policies for language in their exclusions that would bar coverage for COVID-19 related claims. Under a commercial general liability (CGL) policy, allegations that an insured caused injury to a customer, guest or third party harm by failing to exercise reasonable care in implementing, enforcing or warning of the risk of potential exposure to the coronavirus could be covered absent a specific exclusion addressing virus or pandemic.


Professional Liability/E&O

Professional Liability/E&O carriers could have similar exposure. This will be particularly true for health care providers, and a sore spot in the long term care field. Residential facilities face a barrage of bad-to-worse choices involving staffing, new admissions and readmissions. Key defenses on behalf of the insured would focus on duty and causation in face of an unprecedented global pandemic when federal, state and local public health guidelines and directives defining duty and the standard of care are frequently evolving and changing.

Other professional service providers on the frontlines may face liability claims as well. For instance, insurance brokers might be brought into a coverage dispute related to a claim denial based on the pandemic. A financial advisor managing a portfolio that has just gone up in smoke might face a claim by a client seeking to recover some of their wealth. This reflects the range of exposure resulting  from COVID-19 that may be covered depending on the type of professional service provided.

See an example of a recently decided case where a business sued a hospital alleging it negligently failed to prevent transmission of the Ebola virus to a nurse through improper attention to precautions and training which caused the shop to close after she visited and later became ill. The Texas Supreme Court affirmed dismissal because expert medical testimony was necessary to prove the claim under the health care liability statute.

Coming Attractions Bridal and Formal Inc v Texas Health Resources

lnsurers must be mindful of being hasty in denying claims without investigation and giving rise to a bad faith claim. In Illinois, an insured restaurant group sought coverage for business interruption of its businesses and was denied, sometimes within hours of making the claim, and by cursory communication. Its insurer is now facing a bad faith claim for failure to investigate.

Big Onion Tavern Group, LLC et al v. Society Insurance, Inc., 1:20-cv-02005 (March 27, 2020).


Financial Institutions

Financial institutions may be exposed to liabilities that arise under Professional Liability and E&O policies that could impact claims against financial advisors or money managers as discussed above.



With work-from-home being the new normal for the time being, cyber scams specifically related to the pandemic are on the rise. It is likely this rise in activity will result in a proliferation of claims. Again, without a specific exclusion, these claims will likely be covered.



Directors and officers could also get into the sightlines of shareholders who have seen their portfolios plummet. Companies are likely to be scrutinized for the substance and timeliness of responses to COVID-19, communication and efforts to reduce losses as information came to light. The Securities Exchange Commission (SEC) has given some extensions of filings required under the Exchange Act and encouraged public companies and their auditors to disclose the anticipated impact of the outbreak on the company to investors. [,].

As we are already seeing, many companies are adjusting their earnings projections, so the possibility of a stock drop after an announcement relating to the effect of COVID-19 is certainly plausible. Securities litigation alleging disclosure deficiencies, breach of fiduciary duty and corporate mismanagement, may trigger coverage under D&O insurance policies.



Similar to the dangers presented for directors and officers, so goes the exposure of fiduciaries who have responsibility for employee benefit plans which well-being is subject to market volatility incited by the pandemic. Employees may make fiduciary claims related to the handling or mishandling of fiduciary responsibilities as expectations form around the appropriate response to the consequences of the pandemic.


EPL/Labor & Employment

Changes abound in the rules and guidelines for employers like, who is essential, workplace safety, discrimination and harassment, working remotely and virtual meetings. In addition to the inevitable workers’ compensation claims, discrimination and harassment claims covered under EPL insurance could arise. Employers may seek coverage under their EPL policies for claims by employees alleging discrimination or harassment against protected classes as a result of human resources policies implemented in response to the outbreak. Employers should also be aware that the Americans with Disabilities Act (ADA) protects employees from certain inquiry relating to COVID-19 and HR staff should be fully educated to avoid EPL claims under the ADA. This also requires a balancing act in protecting other workers and providing a safe workplace for everyone.



The future is uncertain. Insurers can expect pressure from regulators to spread the risk and the pain of this pandemic as we are seeing in the recent measures announced by various states. The standards under which our insureds will be measured is a target moving at lightning speed. As the economy comes back to life (roars hopefully), regulators will be scrutinizing insurer’s financial stability. Reinsurers and board members will be pushing for pandemic exclusions in all policies from this point forward. Any oversight will include an expectation that businesses have in place written plans, i.e. preparedness, remote workplace, disaster recovery, to more swiftly and efficiently navigate such remarkable circumstances. This crisis will inform our future and promote positive change.