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OT: MLB sues insurance providers, cites billions in virus losses

TopFrog

TopFrog

Lifelong Frog
MLB sues insurance providers, cites billions in virus losses

By JAKE SEINER

Major League Baseball and all 30 of its teams are suing their insurance providers, citing billions of dollars in losses during the 2020 season played almost entirely without fans due to the coronavirus pandemic.

The suit, filed in October in California Superior Court in Alameda County, was obtained Friday by The Associated Press, says providers AIG, Factory Mutual and Interstate Fire and Casualty Company have refused to pay claims made by MLB despite the league’s “all-risk” policy purchases.

The league claims to have lost billions of dollars on unsold tickets, hundreds of millions on concessions, tens of millions on parking and millions more on suites and luxury seat licenses, in-park merchandise sales and corporate sponsorships. It also cites over a billion dollars in local and national media losses, plus tens of millions in missed income for MLB Advanced Media. It says all of those losses should be covered by their policies.

Read more at https://fortworthbusiness.com/sports/mlb-sues-insurance-providers-cites-billions-in-virus-losses/
 
Gary's Shirtless Revenge

Gary's Shirtless Revenge

Full Member
Pharm Frog said:
I’m only interested in how the insurance companies decide to make their defense. Couldn’t care less who wins or loses or by how much. I just want to see municipalities and states dragged into the fray.
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There is no defense, just an assumption that a negotiated settlement will be materially less than simply paying the claim.
 
East Coast

East Coast

Tier 1
The insurance companies will try to keep their losses down by claiming MLB did not make a good faith attempt at playing more games and maximizing their revenue. I'm guessing that yes, basically a negotiating tactic. (and I didn't bother to read the article FWIW)
 
Pharm Frog

Pharm Frog

Full Member
East Coast said:
The insurance companies will try to keep their losses down by claiming MLB did not make a good faith attempt at playing more games and maximizing their revenue. I'm guessing that yes, basically a negotiating tactic. (and I didn't bother to read the article FWIW)
Click to expand...

How might the player’s association behavior factor in?
 
frogs9497

frogs9497

Full Member
I work in the reinsurance industry and read all sorts of related literature. Here are a few excerpts not directly related to this lawsuit, but they do provide a glimpse of the industry's perspective. It basically comes down to the fact that carriers cannot adequately price the risk of government shutdowns.


The world’s property/casualty insurers would have to collect business interruption insurance premiums for 150 years in order to absorb the estimated US$4.5 trillion global output loss inflicted by COVID-19 and its handling in 2020.

COVID-19 has exposed massive a protection gap in the area of business continuity risk. Less than 1% of the estimated US$4.5 trillion global pandemic-induced GDP loss for 2020 (according to The World Bank) will be covered by business interruption insurance, which is generally intended for and triggered only by physical damage.

“Even those who anticipated the scenario of a global pandemic did not fathom the nature and scale of government decisions taken around the world to slow infections: wide-ranging shutdown measures that brought economies to a standstill,” says a forward to the report signed by the Geneva Association’s Managing Director Jad Ariss. “From an insurance perspective, this type of government response is neither predictable nor modellable. That is one of the reasons why pandemic risk was not included in most business interruption policies,” Ariss continues.


Criteria of Uninsurability

First, the losses are neither random nor independent. Even though pandemics are naturally occurring phenomena, policy decisions to lock entire economies are deliberate and intentional, which means that expected loss amounts and risk loadings cannot be set, the report explains. Further, no historical data exists for the governmental policy responses seen during COVID-19, it continues. “Furthermore, the strong correlation among individual risks renders efficient risk pooling and diversification impossible.”

Second, the maximum possible loss is not manageable from the point of view of insurers’ solvency. “The uncontrollable aggregation of losses could be ruinous to the risk pool and, ultimately, to the insurance industry as a whole. This in turn could lead to significantly further financial stability risks across the wider economy,” the report says.
 

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