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44 www.canadianlawyermag.com LEGAL REPORT INSURANCE The experience of the insurance industry and its customers — what's denied and what's covered — will lead to an evolution in product offerings, says Richard Swan, co-head of Bennett Jones' litigation department and co-chairman of the firm's commercial liti- gation practice group. After the pandemic subsides, with the understanding that another could arise in the future, businesses and organizations are going to take a closer look at their insurance policies, their coverage and terms and exclusion provisions, and a "market negotiation" will follow where insur- ance companies adjust their product offer- ings, he says. "Insurance products do have a habit of coming forward to address a need in the market and — priced accordingly, of course — there will be new products or at least adjust- ments to current products that you see in the industry," says Swan. COVID-19's effect on insurance has a parallel in the terrorist attacks of Sept. 11, 2001, says Knutsen. At that time, he was prac- tising tort and insurance litigation at Paul Weiss LLP in New York, where he dealt with many 9/11 cases. Similarly, after 9/11, there was a spike in business interruption, ingress and egress, civil authority and contingent business interruption claims. The same was true following Hurricane Katrina, he says. "If I had advice to lawyers in Canada . . . it would be look south to the various disasters there for how the insurance practice and the case law responded," he says. to a situation where customers are physically prevented from entering the business; for example, a restaurant on a street on which the city has a long-term construction project. Knutsen notes that "very few policies" have ingress egress coverage. Finally, civil authority coverage is designed for when a government effectively shuts down a business. "Think quarantine," says Knutsen. "You cannot go into that store, it's quaran- tined. The business income stream drops, the insurance kicks in." Although these commercial property insur- ance policies will be relevant, policy holders may be out of luck for COVID-19-related losses. Knutsen notes that many of these poli- cies have exclusions for viruses and diseases. "But I can see lawyers grasping for coverage for their clients trying to find a way to make some of these standard commercial coverages work because people are really losing their income," he says. In liability insurance, the pandemic will have insurers looking closely at pollution exclusions, says Viney. Policy wording can define pollutants narrowly, such as smoke vapours, soot, noxious fumes, gases and chemicals, but other policies are broader and "might be more applicable," she says. "There's a very broad range of pollution exclusions and policies out there right now," says Viney. "That'll be an interesting question when we do get into potential claims under pollution policies, whether or not something like this is going to count as a pollutant." "If I had advice to lawyers in Canada . . . it would be look south to the various disasters there for how the insurance practice and the case law responded." Eric Knutsen, Queen's University Faculty of Law 9/11 AND HURRICANE KATRINA Queen's Law Professor Eric Knutsen says a preview for how COVID-19-related insurance claims will play out can be found in the aftermath of these two disasters. Katrina Insured losses: US$82 billion Source: Insurance Business America 9/11 Insured losses: US$45 billion Source: AON's Terrorism Risk Insurance 2019 Report 9/11 and Hurricane Katrina gave rise to claims that: • were individually large, collectively massive (led to disputes and put strain on industry); • were like other claims, causing claims handlers to be conservative, so other policy holders didn't spot favourable claims positions and demand similar treatment; • involved newer forms, with broad coverage, with little case law to serve as guide; • were made as financial markets — in which insurance companies are heavily invested — were "retrenching dramatically." Source: Business Income Coverage in the Post-9/11 World: How Insurance Companies Have Changed the Claims Handling Playbook Since 9/11 and Hurricane Katrina By Richard Lewis and Marshall Gilinsky