The Role of Business Interruption Insurance in Mitigating Financial Losses during Pandemics

Affiliation

Abstract

Business interruption insurance plays a crucial role in protecting businesses from financial losses
caused by unexpected disruptions. The COVID-19 pandemic exposed significant gaps in traditional
business interruption insurance policies, as many businesses were unable to obtain compensation
for losses resulting from government-imposed lockdowns and public health restrictions. This study
examines the role of business interruption insurance in mitigating financial losses during
pandemics and evaluates its effectiveness in supporting business continuity. A descriptive research
design was adopted, and primary data were collected from 150 respondents using a structured
questionnaire through convenience sampling. The collected data were analyzed using Percentage
Analysis and the Chi-square Test. The findings indicate that most respondents are aware of
business interruption insurance and perceive it as an effective tool for reducing financial losses
during pandemics. The study also reveals that while there is a significant association between
gender and awareness of business interruption insurance, no significant association exists between
business size and its perceived effectiveness. The study concludes that expanding policy coverage,
improving awareness, simplifying claim settlement procedures, and strengthening public-private
partnerships are essential to enhance the effectiveness of business interruption insurance. The
research provides valuable insights for insurers, policymakers, and business organizations in
developing more resilient insurance solutions for future public health emergencies.

Keywords

Business Interruption Insurance, Pandemics, Financial Losses, Business Continuity, Public Health Emergencies, Risk Management.