This is very notable, and thus I share it with you, but there is a LOT of context that you need before you go running off and thinking this is something it isn’t.
First, the news:
Major League Baseball and all 30 of its teams are suing their insurance providers, citing billions of dollars in losses during the pandemic-altered 2020 season.
— AP Sports (@AP_Sports) December 5, 2020
The first bit of context for you: this is standard.
I don’t draw on my legal background too often anymore, but this is one area where I can offer a little something. In short, any time a huge business suffers a monster loss, they’re going to look at all possible angles to recover funds. One of those angles, obviously, is going to be their insurance provider. And, those insurance providers tend to deny monster claims like that as a matter of course. (Insert your commentary here about insurance providers’ business model.) Then, in turn, the big company has to start rattling sabers about legal action, and then maybe even has to turn to legal action to get their claim more seriously considered.
So, then, that’s really all that’s happening here. Two sets of giant companies fighting about who bears what percentage of the lost revenues from 2020.
These types of cases can take years to reach even a point where serious settlement talks take place, because again, there are billions of dollars at stake. I worked as a very, very low man on cases like this. They do not move quickly. So if you’re thinking a quick win for MLB will mean a fundamental change in their spending plans for 2021, think again. This will move sufficiently slowly that you will have long forgotten about it by the time it resolves on way or another (a negotiated settlement in a couple years is a virtual lock, in my opinion).
One part of the AP story that sticks out to me, though, is the fact that minor league teams are also proceeding with these types of suits, and, man, just pay out their claims, insurance providers. Massive, unexpected, unpredictable losses like what happened in 2020 that threaten to wipe out entire local businesses are why those business pay for catastrophic insurance coverage in the first place. Just pay the dang claims.
The challenge for the minor league teams – and for MLB, apparently – is that many of these insurance policies have built-in exclusions (some about viruses, per the AP) that can be used to deny coverage for this or that. It tends to be the case that both sides can make an argument about the language in the agreement – it’s never as crystal clear as you might think on an initial read, even when the words seem plain, and it’s never really about the spirit of what was supposed to be covered – which is why you see initial denials, fighting, and then lawsuits. It is, if I may, a really bad system. Get close enough to it and you’ll get really cynical about insurance like I’ve become, hence the parenthetical up there above. Can’t help myself on this topic. Hence this non-sequitur aside. I just get riled up.
Anyway, circling back to the news: this is kinda not really news. It makes for a headline story, but this is all just so very standard when you have major financial losses. There will be an insurance fight, and then after years, there will be a settlement at something less than the full covered amount. I’ll update you in 2024.