Witnessing major hindrances in terms of operations due to the Outbreak of COVID-19, mall owners across the country have requested the Union Ministry of Finance and Insurance Regulatory Development Authority (IRDA) to get insurance companies to cover business interruption insurance claims to tacklet losses suffered during the lockdown period.
The business interruption insurance is meant for covering lost revenues and also the recurring costs of the business while its closed or out of commission in cases of a disaster.
As per India’s traditional business interruption insurance policies, physical damage to property is the only criteria to control business interruption loss, while pandemics and epidemics are specifically not a part of it.
Insurance companies, therefore, are denying the acceptance of any claims occurring due to shutdown stating that exclusion of pandemics and closure due to this direction does not comprise physical loss or damage.
In a letter to both finance ministry and IRDA, the Shopping Centers Association of India (SCAI), has requested insurance companies to compensate actual recurring expenses suffer by mall owners one quarter after the normalcy under the said insurance cove
“The negative impact on cash flows in these times of global economic slowdown, coupled with the rippling effect of this pandemic, without acceptance of the insurance claims and compensation from the insurance companies or government support on the losses, it will push us back on the growth achieved in the last 5 years,” said Amitabh Taneja, Chairman, SCAI.
The mall owners have also requested revoke the recent increase in the insurance premium rates by the General Insurance Corporation of India (GIC).