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Travellers wearing masks arrive at Pearson Airport in Toronto on March 15, 2020, amid growing global numbers of coronavirus cases.CHRIS HELGREN/Reuters

The insurance industry is sounding the alarm that most businesses in Canada are not covered for the potential business interruptions caused by the novel coronavirus pandemic.

“Generally, commercial insurance policies and traditional business interruption policies do not offer coverage for business interruption or supply-chain disruption due to a pandemic such as COVID-19,” said Craig Stewart, vice-president, federal affairs with the Insurance Bureau of Canada.

Businesses and individuals typically take out property and casualty (P&C) insurance to cover for natural disasters such as storms and fires. For example, about $3.7-billion of the damage caused by the 2016 fires in Fort McMurray, Canada’s costliest disaster, were covered by insurance.

Specialty coverage for disruption of business and supply-chain operations due to a pandemic does exist, and it could have been triggered by the World Health Organization’s official designation last week of the global outbreak as such. But “it is anticipated that the number [of companies that have it] is quite limited," Mr. Stewart said.

Jennifer Beaudry, a spokeswoman for Intact Financial Corp., Canada’s largest P&C insurer, said coverage for pandemics “is not common in Canada and Intact does not offer [it].” She said Intact’s base contracts require an insured party to have a damaged building, equipment or stock on location to trigger business-interruption coverage.

Insurance-industry officials briefed the federal government last week about the potential issue after Ottawa reached out to key sectors to gauge how the pandemic could affect them.

“The government is in contact with Canadian insurers,” a finance department spokesperson said in an e-mail to The Globe and Mail. “We understand that not every business has business-interruption insurance and that pandemics are not likely covered in this type of insurance. If businesses have questions about their coverage, they should consult with their insurance advisers.”

Dennis Darby, president and CEO of Canadian Manufacturers & Exporters (CME), a leading business lobby group, said as a result of the pandemic, “manufacturers will have to shut down, business continuity will be affected and, unfortunately, it is unclear if they will be able to rely on their insurance policies.” The CME has urged the government to take steps to blunt the impacts on the Canadian economy.

The government moved Friday to help the private sector by making $10-billion in business credit financing available through the Business Development Bank of Canada and Export Development Canada. In addition, the Bank of Canada slashed interest rates and Office of the Superintendent of Financial Institutions lowered the domestic stability buffer for Canada’s systemically important large banks, enabling them to increase their lending capacity by more than $300-billion.

Ottawa has also pledged to introduce a stimulus program for the economy this week.

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