Editor’s Note: Christopher Swift is chairman and CEO of The Hartford. The opinions expressed in this commentary are his own.
Ever since the pandemic began, some plaintiffs’ attorneys have been pushing a false narrative, claiming that The Hartford and other insurance companies owe money to businesses shuttered by Covid-19 and we improperly refuse to pay. These lawyers want to turn our customers’ carefully protected and managed premiums into an all-purpose rainy-day fund, which they were never intended to be. That’s not how insurance works nor is it a realistic solution to this economic conundrum caused by the shutdowns.
The truth is, insurance companies are in the business of paying claims. We pay often and a lot. Customers pay us premiums, which are pooled as investments and paid out to those who suffer a loss from a storm, fire, injury, accident or anything else that is protected under one of our insurance policies. We take pride in treating people with care and making sure they get the financial support they are entitled to under the terms of their policy.
Tragically, millions of businesses across the country have closed their doors because of government-ordered shutdowns. Unfortunately, viruses are generally outside the scope of business interruption coverage due to the absence of any physical damage. These policies do not cover this exposure and, accordingly, premiums were never collected for it.
Property insurance, where most business interruption resides, requires the pooling of policyholder premiums together to pay for disasters that damage the property of a limited number of customers for a short period of time. Pandemics violate that fundamental principle of insurance. Simply put, you can’t define, pool or price risk for something that affects so many, all at once, for an indefinite period. Along with our agent and broker partners, we strive to be clear and transparent with our customers about the events that are covered — or not covered — by our policies so people know what to expect. Divisive rhetoric, half-truths and sound bites can’t rewrite contractual terms.
Keeping our promises has enabled The Hartford to be successful for more than 200 years. The reason we have stayed in business through events like the Civil War and the Great Depression is that people trust us. Just last year, we incurred $11.47 billion in losses paid for claims. And, while so much of our collective focus right now is on this pandemic, the events that are covered by a property insurance policy continue to happen like the drumbeat of a hailstorm. The coronavirus won’t put hurricanes on hold. The virus didn’t stop tornado season this spring. And it’s not going to halt the spread of wildfires this summer. In April, The Hartford received claims for property damaged by hail in Texas, a tornado in Tennessee and severe thunderstorms in Virginia. We are paying these claims and helping customers restore their lives and livelihoods — as we have for more than two centuries.
As we’ve seen throughout history, recovering from an event as all-encompassing and devastating as this pandemic depends on a federal government response. We applaud the Federal Reserve, the Trump administration and Congress for taking quick and necessary steps to assist the capital markets and support local businesses and individuals. We are doing our part to help find solutions, including working in Washington D.C. to encourage additional relief for businesses. We are also partnering with businesses, elected officials and trade groups across a variety of industries in the creation of the Business Continuity Protection Program, which would provide immediate relief to businesses in the form of revenue replacement assistance for payroll, employee benefits and operating expenses following a viral emergency.
Like our customers, we have a lot at stake. The Hartford has insured small businesses for more than two centuries, and today our policies protect more than a million small businesses. We are inextricably linked to one another in our ability to survive and thrive again. Our company’s heritage, values and resources combined with the ingenuity and resiliency of small business owners gives me confidence that we will prevail together, despite the efforts of some to tear us apart.
