The coronavirus pandemic has exposed a critical gap in insurance cover after insurers said that many business interruption (BI) covers do not offer cover medical pandemics, the company said.
Machine Cover founder and CEO Inder-Jeet Gujral said: “Currently available insurance products are not fit for purpose because they do not cover companies for unforeseen consequences such as unexpected shortfalls in revenues, the inability to trade and the cost of letting go of members of staff.
“The inadequacy of BI policies has resulted in large numbers of businesses issuing lawsuits against their insurers to try to recover cash to which they believe they were entitled. In many cases, businesses have been unable to continue trading because the pandemic has resulted in shortfalls few could have foreseen.”
The new parametric product being developed by the Boston-based company can be purchased by businesses as an add-on to their existing commercial policy.
The offering, the company claimed, will automatically trigger pay out to business when there is a significant dip in economic activity.
The payout will be triggered by a number of defined events.
Insured businesses will receive a quick and automatic pay-out in case the policy is triggered due to the pre-agreed parametric measure. They won’t even have to stake a claim.
Gujral added: “Our product uses parametric triggers to determine when there is a significant drop in economic activity in a given area – it could be caused by a pandemic, a large factory closing, or major road-building activity, we don’t mind – and the policy-holder will be automatically paid an agreed amount.
“If something happens which is outside the control of a business owner, they get a quick, no-questions-asked payout to help their cashflow. This is exactly the type of coverage which countless thousands of businesses thought they had paid for when they bought their current BI policies before the coronavirus pandemic.”