The pandemic coverage gap

Here are three of the week's top pieces of financial insight, gathered from around the web:

A better deal for small-business aid

The Treasury Department fixed a central problem with the $349 billion small-business bailout last week, said Eric Levitz at NYMag​. The aid package promised companies with fewer than 500 employees loans to cover "the equivalent of eight weeks of your prior average payroll," plus an additional 25 percent. But the loans were supposed to go through the "notoriously lethargic bureaucracy" of the Small Business Administration. Now firms that need help can apply at any bank. Additionally, companies that have already had to lay off workers "can secure forgiveness by 'quickly' rehiring." The government has pledged to "entirely forgive the portion of the loan spent on payroll, benefits, utilities, rent, mortgage payments, or other debts" — in other words, "more or less all of it."

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The pandemic coverage gap

A third of U.S. companies have "business interruption insurance," but a policy change to most insurance contracts made after the 2003 SARS outbreak will make it difficult to get a payout, said Todd Frankel at The Washington Post. SARS, or severe acute respiratory syndrome, infected only 8,000 people worldwide but "led to millions of dollars in business-interruption insurance claims." As a result, insurers "added exclusions to standard commercial policies for losses caused by virus or bacteria." Some policies have "civil authority" clauses for "when a government agency stops a business from operating," but these generally require physical damage to be triggered. A restaurant in New Orleans filed a lawsuit last month "claiming the insurer should be required to pay because coronavirus had caused property damage by contaminating surfaces."

Hedge-fund quarantine

For one financial firm, "work from home" means working while secluded with 23 other traders in an empty Four Seasons resort, said Liz McCormick at Bloomberg. Two days before Florida announced a statewide lockdown, Citadel Securities, a corporate cousin of the $32 billion Citadel hedge fund founded by Ken Griffin, opened a "temporary trading floor" in Palm Beach, Fla., inside "part of a hotel property that's closed to the public." The traders, who were flown in from Chicago and New York, "will work and sleep there" and "remain on site" at all times. The firm "built the infrastructure necessary for the Florida facility in less than a week and began trading there when U.S. markets opened" last week.

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