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Casino Sues Property Insurer for COVID-19 Losses

Jun 5, 2020

The dollar signs continue to add up in the stand-off between insurers and insureds over pandemic-related business interruption and other property losses.  Last week, a large Las Vegas casino hotel and resort, Treasure Island LLC,  sued its property insurer “arguing that the full $1.18 billion combined limit on its property policy applied to its losses.”  The insurer had previously denied the casino’s business interruption and property damage claims, but left open the possibility of limited cleanup coverage under the policy’s communicable disease $100K sublimit.

Due to COVID-19, Las Vegas’s casinos and hotels shut down in mid-March, 2020, and have just begun to reopen.  Over the past two and half months, the gaming industry has lost billions of dollars.  Specific to Treasure Island’s losses, the insured is arguing that the pandemic triggered 9 separate coverage grants under the property policy.  Additional lawsuits are no doubt in the pipeline.

IInsurance Executives are Optimistic that Property Policy Wording Disavowing Coverage for Pandemics will Prevail

A group of insurance executives spoke earlier this week to S&P Global Inc.’s 202 Virtual Insurance Conference.  Both the chairman and CEO of Hartford, Chris Swift, and the president and CEO of W.R. Berkley Corp., Rob Berkley touched on one of the insurance industry’s biggest COVID-19 related concerns; do property policies cover business interruption and property damage arising out of the pandemic?  From the Hartford’s perspective, Mr.  Swift noted that “’…we think our wording is abundantly clear.  Specifically, when there is coverage added back for viruses it’s in conjunction with remediating property damage caused by a covered peril.’”  Mr. Berkley suggested that “’(t)here is no doubt there are countless examples of where there is coverage that is provided, and that insurance should perform…’ (b)ut the plaintiffs’ bar is choosing to use a ‘broad brush’ and is ‘disregarding realities that stem from virus exclusions, as well as other wordings that would suggest that physical damage is required to trigger business interruption.’”

Private Equity and 401(k) Investments:

Earlier this week, the Department of Labor issued new guidance about 401(k) investments.  The DOL will now permit trustees of these plans and their service providers to invest in private equity funds.  Historically, only pension funds were able to do so.  Specifically 401(k) target-to-date, target risk and balanced funds can all now invest in private equity.  According to the administration, this development is  “good news for American workers…open(ing) the door for 401(k) participants to access a ‘high-return’ investment option.”

Claire Wilkinson, Insurer CEOs optimistic business interruption wordings will hold, Business Insurance, June 4, 2020.

Gavin Souter, Casino sues FM Global unit for up to $1 billion in coronavirus cover, Business Insurance, June 3, 2020.

Daphne Zhang, Vegas Casino Says $1.1B Policy Covers COVID-19 Losses, Law360, June 1, 2020.

Treasure Island, LLC v. Affiliated FM Insurance Company, case number 2:20-cv-00965, in the U.S. District Court for the District of Nevada.

Dawn Gilbertson, “Best day ever’: Gamblers flock to downtown Las Vegas on first night casino re-openings, USAToday, June 4, 2020.

Emily Brill, Federal Guidance Oks Private Equity Funds in 401(k) Plans, Law360, June 3, 2020.

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