Freakonomics Radio 437. Many Businesses Thought They Were Insured for a Pandemic. They Weren’t.
Oct 29, 2020
Bruce Carnegie Brown, Chairman of Lloyd's of London, dives deep into the world of insurance and business interruption policies. He reveals the shocking truth that many businesses were not covered for pandemic-related losses due to vague policy language. The discussion highlights legislative pressure on insurers and examines the disparities between small businesses and large corporations. Carnegie Brown calls for innovative solutions in insurance to better safeguard against future crises, emphasizing a need for collaboration between private and public sectors.
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Repeated Disasters at Three Brothers Bakery
- Three Brothers Bakery, owned by Janice Jucker, has faced numerous disasters, including floods, fire, and a hurricane.
- These events caused significant damage, but insurance covered most of the costs.
COVID-19 and Business Interruption Insurance
- Business interruption insurance often doesn't cover pandemics due to the requirement of physical damage.
- Many small businesses, like Three Brothers Bakery, discovered this during COVID-19.
Insurance as an Investment Business
- Insurance companies make money not only from premiums but also by investing those premiums.
- Market downturns, like at the pandemic's start, can impact their investment returns.