Kutak Rock partner Tasha Cycholl and associate Andrew McNichol, both in the firm’s Scottsdale office, co-authored the article “Coronavirus and the Contract Clause” for the summer 2020 issue of the Federation of Regulatory Counsel’s (FORC) Journal of Insurance Law and Regulation. 

Ms. Cycholl and Mr. McNichol note that Coronavirus will result in significant and presently unknowable losses to insurers.  The novelty of a global pandemic makes it difficult for insurers to price risk relating to such outbreaks, and insurers cannot sell coverage for risk they cannot price.

One estimate of the economic toll COVID-19 has put on the United States is $420 billion. Insurance is one way to prospectively allocate future losses. The authors analyze the constitutionality of state and federal legislation mandating that insurance policies provide coverage to individuals and businesses for losses and liability arising due to Coronavirus. Legislative attempts to mandate coverage will run into a major roadblock: the Contract Clause of the federal Constitution, as well as the contract clauses of the various state constitutions, which prevent retroactive impairment of existing contracts. The article discusses the outcomes and barriers of mandated coronavirus coverage.

Ms. Cycholl concentrates her practice on insurance regulation and corporate and administrative law. Mr. McNichol works in the insurance regulatory practice group, and has experience in both regulatory matters and litigation. Kutak Rock summer law clerk Iris Lim contributed to this article. 

Article: Coronavirus and the Contract Clause