COVID-19 is likely to drive a surge in disputes and contested claims. Companies that take proactive action now can mitigate their impact.
In the confusion and unpredictability that characterizes the economic impact of COVID-19, one outcome is certain: there will be a wave of disputes. This will take many forms including: contested business interruption and event cancellation disputes and claims; contractual disputes, particularly within supply chains; M&A disputes; and class actions from both employees and consumers. Insurance companies and corporates are already preparing for conflicts over whether business interruption and other policies, such as credit insurance, cover pandemic risk.
The risk and impact that follow are likely to be significant – Lloyd’s of London has estimated a US$203bn total projected loss to the insurance industry alone due to COVID-19. Practical steps taken now can protect organizational value for the future.
History shows that economic downturns typically lead to increased litigation, and we are expecting a global recession as a result of COVID-19. Inevitably there will be an increase in contested insurance claims, disputes between customers and suppliers, and opportunistic behavior. So, when the surge arrives, “who will pay” – and how can businesses prepare for the fallout?
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