This resource library is evolving and will be updated as content arises. Please check back for more soon!
4/29/20 | COVID-19 Impact on PC Insurance Market
One of the legislative solutions being considered in Congress is “retroactive business interruption (BI),” which could mean one of two things: forcing insurers to cover COVID-19 related BI losses even if there was a virus/bacteria exclusion in the policy, or expanding BI coverage to all small- and medium-sized enterprises (SMEs) and forcing insurers to cover all COVID-19 related BI losses. The Insurance Information Institute (Triple-I) recently hosted a webinar where panelists discussed why both of those options would severely negatively impact the insurance industry, and thus why other legislative options, such as a federal pandemic backstop, ought to be considered instead.
4/15/20 | ALIRT: Overview of Ongoing Debate over BI Coverage
The question of whether or not business interruption coverage will be triggered by COVID-19 related losses is perhaps one that comes up the most when discussing how the pandemic will impact the insurance industry. ALIRT Insurance Research put out a report laying out where the issue stands as of April 2020. It covers relevant disputes, state regulatory response, and offers an assessment of the best next steps for the federal government.
4/10/20 | New Claims Denial Raises Fresh Questions about Pandemic Coverage
Media Zoo, a communications agency in London, thought it had all its bases covered. Before the COVID-19 pandemic began, the firm went through its broker to secure business interruption coverage for losses caused by “the inability to use the insured premise due to restrictions imposed by a public authority,” due to “an occurrence of a human infection or human contagion disease.” Yet their insurer, Hiscox Insurance, has denied the claim, declaring that “cover only applies when there is an incident within a one-mile radius of the insured building,” and that “the government’s decision to close businesses is part of a package of measures to prevent the spread of COVID-19 across the country and therefore isn’t aimed at an outbreak traced to an individual business’s premises.” Most crucially, a Hiscox spokesperson stated that “Like terrorism and flood risks, which have government-backed schemes, these types of events are simply too large and too systemic for private insurers to underwrite.” This is an important question to consider: are national programs like the US National Flood Insurance Program or Terrorism Risk Insurance Program necessary to backstop the industry in the event of a pandemic?
3/23/20 | COVID-19: Considerations for Documenting a Potential Business Interruption and Extra Expense Claim
Business interruption is likely one of the lines that will be most often invoked by firms impacted by COVID-19-related losses, despite the ambiguity over whether such losses will be covered. To help brokers assist their clients, Conner Strong & Buckelew detailed five important things firms should keep in mind when preparing their claims. The key moral of the piece: document everything. Even if a firm decides not to pursue claims over COVID-19, it will be valuable to have that documentation available for future claims.
Carriers are now adding specific Covid-19 exclusions in product lines such as property, environmental, and event cancellation. At the same time, some insurers and brokers are eyeing up new opportunities that have arisen from the outbreak.
In fact, Marsh offered clients a parametric standalone pandemic insurance policy (PathogenRx) more than two years ago that would have likely provided coverage in the current coronavirus crisis, but no one bought it. The product was intended to provide business interruption coverage in the event of a pandemic.
As conventional business interruption insurance typically requires “direct physical loss or damage” for coverage to be triggered, it is currently in question whether or not such coverage will help business absorb losses from interruptions to their business due to coronavirus
An interesting Cozen O’Connor piece discusses how courts have analyzed and applied first-party property policies for these types of non-physical losses, potential coverage under a civil authority provision, and pollution/contamination exclusions.
Business Interruption Litigation
5/5/20 | Hospitality Group Threatens Legal Action against Insurers
The Hospitality Insurance Action Group (HIGA) is considering bringing a lawsuit against several insurers, including AXA, RSA, QBE, and Zurich. HIGA, a business group formed recently, is composed of pubs, restaurants, hotels, and other hospitality firms who feel their COVID-19 business interruption claims were unfairly limited or denied by their insurers. Lawyers for the group expect a decision regarding the suit to be made after the end of May.
Hiscox Policyholders Pool Resources to Take Insurer to Court
A group of more than 300 UK businesses and Hiscox policyholders have formed the Hiscox Action Group in order to force the insurer to pay business interruption claims. While the Hiscox Action Group argues that the policy wording is sufficiently broad to encompass business interruption due to measures taken by the UK government to forestall the spread of COVID-19, Hiscox disagrees. “Like others in the industry, Hiscox UK’s core small commercial package policies do not provide cover for business interruption as a result of the general measures taken by the UK government in response to a pandemic,” said the insurer in a statement April 22.
Thor Equities Files Lawsuit against FM Global for $20 Million in Coverage
Real estate firm Thor Equities filed a complaint against FM Global on April 30, alleging that the insurance companied had breached its contract and seeking a declaratory judgment “that it is entitled to the full amount of coverage it paid substantial premiums for and badly needs.” Thor Equities argues that it is entitled to full coverage for its predicted $20 million losses due to COVID-19 despite the sublimit of $1 million for coverage for losses from communicable disease in the policy. “By focusing solely on the communicable disease coverages in its acknowledgment letter, FM sent a clear message that it was not prepared to consider Thor’s significant costs and losses under any of the Policy’s other coverages, despite those losses being covered under those coverages.”
4/16/20 | Wave of Business Interruption Litigation Continues to Grow
This week, a California lawyer filed five separate suits against Travelers for business interruption coverage related to the coronavirus pandemic; across the country, River Twice Restaurant in Philadelphia sued W.R. Berkley for similar coverage. All suits, much like the ones we have covered in previous posts, seek declaratory judgments that affirm the business interruption policies held by the plaintiffs cover losses due to government-ordered closures. According to Travelers, “In our standard commercial property policies that include business interruption coverage, we have very specific exclusions stating that losses resulting from a virus or bacteria, including physical damage or income, are not covered.” As such, perhaps in cases like this it will come down to whether or not the losses are established to result from civil closures, or from the virus—in the former case, the exclusions Travelers mentioned would naturally not apply.
4/15/20 | Preemptive COVID-19 BI Class Action Launched in Florida
On April 9, the El Novillo restaurant group filed suit against several Lloyd’s of London syndicates, joining other businesses and groups across the US in attempting to force their insurers to pay BI claims stemming from civil authority closures. “This action seeks a declaratory judgment that affirms that the COVID-19 pandemic and the corresponding response by civil authorities…triggers coverage…and finds that the underwriter defendants are liable for the losses suffered by the policyholders,” said the filing. The suit also seeks a declaration that future losses from civil authority closures will also be covered. The judgment will not only apply to the El Novillo Group, but also to hospitality businesses like bars, hotels, etc., as long as their policies do not contain exclusions for COVID-19 BI losses.
4/8/20 | Business with Pandemic Event Endorsement Sues for Business Interruption Coverage
SCGM, Inc., a Texas-based theater chain, has filed suit against Lloyd’s of London over business interruption coverage for losses incurred due to government-ordered closures. Like other recent litigation over business interruption coverage, the suit seeks a declaratory judgment that COVID-19 related business interruption losses are covered under the chain’s existing business interruption policy. But where this suit differs from other recent litigation is that unlike many of the other groups involved in litigation, the chain specifically added pandemic event coverage to its business interruption policy last June. Nevertheless, Lloyd’s still denied the claim, as COVID-19 “is not covered under the Pandemic Event Endorsement as it is not a named disease on that endorsement,” according to Lloyd’s response denying coverage. The suit, however, alleges that because “Severe Acute Respiratory Syndrome-associated Coronavirus (SARS-CoV) disease” is named in the endorsement, and because “SARS-CoV-2 is the causative virus for the COVID-19 disease,” SGCM’s losses should be covered.
4/6/20 | Litigation over BI Coverage for COVID-19 Continues
A sports bar in Tampa, Florida, joins other organizations in bringing litigation against its insurers to secure business interruption coverage for COVID-19-related losses. Prime Time Sports Grill submitted a claim to Lloyd’s of London for coverage for lost business due to the March 17 order closing Florida bars and restaurants, only to have the claim denied on March 23. Now, as of Thursday, April 2, the company seeks a declaratory judgment “that the policy issued by Underwriter to Prime Time provides coverage for the losses stemming from the COVID-19 governmental suspension of business operations for business income, extra expense, and all other coverage extensions up to the limits of the policy,” according to the suit.
California Restaurant Sues for BI Coverage
Last week, the list of restaurants or restaurant groups suing their insurers for BI coverage grew a little longer with the addition of Scratch Restaurants LLC, a group of restaurants based out of California. The suit, Scratch Restaurants LLC et al v. Farmers Group Inc. et. al. was brought in order to have a court decide whether or not its losses from government closures due to COVID-19 are covered under Scratch Restaurants’ existing business interruption coverage. It comes after a government ordered resulted in lost revenue for Scratch Restaurants and 55 furloughed workers.
3/31/20 | Litigation over BI Coverage Continues with Several New Cases
Several lawsuits have already been filed against insurers for not paying out Business Interruption claims. Following the lead of the New Orleans restaurant, which sued Lloyd’s on March 19 in hopes of forcing Lloyd’s to cover COVID-19-related losses, several other organizations have brought litigation against their respective insurers.
On March 24, the Chickasaw Nation in Oklahoma filed a lawsuit in Oklahoma state court, targeting Lloyd’s of London, AIG, and XL Insurance America. The suit asks for a court declaration that losses from shutting down their casinos in order to slow the spread of the virus be covered by their “all risks” insurance policy, which provides coverage for business interruption.
Thomas Keller, owner of two high-profile California restaurants, sued The Hartford Fire Insurance Co. on March 25, seeking a similar judicial declaration that his policy would cover losses stemming from California’s statewide business shutdown.
Most recently, a group of Chicago-based restaurants and movie Theaters sued Society Insurance Co., a specialty mutual insurer, on Friday seeking compensation for lost revenue and forced closures due to COVID-19. The policyholders argue their coverage includes business interruption for lost revenue resulting from government-ordered closures which does not exclude infectious disease in the policy. The federal suit, Big Onion Tavern Group LLC et al v. Society Insurance Inc., includes a dozen restaurant and movie theater groups expecting more than $10 million in losses arising from government-ordered closures.
3/19/20 | First Coronavirus Test Case Brought Against Lloyd’s by US Restaurant
In New Orleans, Louisiana, a French Quarter restaurant has brought a lawsuit against Lloyd’s of London, hoping to preempt denials of business interruption coverage by securing a judicial order compelling Lloyd’s to cover all losses from government-ordered closures related to COVID-19. Their main argument hinges on whether the contamination of surfaces by the virus qualifies as property damage, thus triggering business interruption coverage. “The coronavirus can stay on substances for many days,” argued the restaurant’s attorney, policyholder advocate John Houghtaling. “So, it’s clearly affecting property, it’s clearly contaminating property, and that is the trigger for business interruption coverage.”
This case merits close attention as it develops, as the precedent it will set could well shape how similar lawsuits are handled in the coming months.
4/02/20 | Webinar: What Brokers Need to Know about Cybersecurity for their Clients
3/27/20 | Guidewire Whitepaper Lays Out Implications COVID-19 Has for Cyber Risk
While considerations based on safeguarding the health of employees are paramount during the pandemic, there are, as always, other risk factors to consider. One type of risk particularly amplified by telework is cyber risk. A whitepaper by Guidewire describes several important cyber risk factors firms ought to consider during this difficult time.
Digital Hygiene Recommendations
Misinformation and COVID-19 scams, including phishing attempts, fraudulent relief organizations seeking donations, and websites that claim to show coronavirus infection maps but in fact will infect your computer with a virus have become a major issue for companies during this time. Cybersecurity consulting firm CyberScout offers some digital hygiene tips to companies that could be useful for reducing the risk posed by this issue.
3/26/20 | COVID-Related Cyber Scams Drive Phishing Emails up 667% in Under a Month
Phishing emails have spiked by over 600% since the end of February as cyber-criminals look to capitalize on the fear and uncertainty generated by the COVID-19 pandemic, according to Barracuda Networks. The security vendor observed just 137 incidents in January, rising to 1188 in February and 9116 so far in March. Around 2% of the 468,000 global email attacks detected by the firm were classified as COVID-19-themed.
3/24/20 | Cybersecurity Remains High Priority for Healthcare Institutions during COVID-19 Outbreak
As the healthcare system nears its breaking point, hospitals will also have to ramp up protective efforts against cyberattacks.
3/19/20 | The Unique Risks of Telework
An article by Zurich North America explores the risks that come with the surge in the number of employees working from home because of social distancing measures intended to curb the spread of COVID-19. Cyber risk in particular is particularly heightened in this new telework environment, as many more employees may be accessing company data through their personal internet, using their personal computers, or working in public venues like coffee shops. Data security goes hand in hand with this, due to the risk of exposing sensitive information through phone calls or audible conversations in public spaces or at home among family.
As more companies begin to test their virtual capabilities, concerns of increasing cyber vulnerabilities arise. Millions of Americans are expected to be working from home at the moment, and experts believe the Coronavirus pandemic is resulting in a host cybersecurity issues, including ransomware and phishing attacks as employees work from their personal computers.
4/10/20 | Risk Mitigating Employment Practices during COVID-19
During a pandemic, businesses must make several important determinations when it comes to best employment practices. Are they allowed to remain open? What methods and controls must be in place to hopefully prevent infection? Woodruff Sawyer has gathered several important guidelines and other resources for business to navigate these complex questions.
3/31/20 | Coronavirus: An Update on Securities Suits and on Updating Company Disclosures
As market votility continues, Priya Huskins of Woodruff Sawyer provides her take on what future COVID-related securities class action lawsuits may look like. Two conronaviruls-related cases have already emerged that might shed some light on what’s to come and what might trigger this type of lawsuit. Although we are in the early stages of this situation, seeing two COVID-related securities class action suits is not good news, but it is worth noting both suits are against companies with very tight connections to COVID-19: a pharmaceutical company working on a cornavirus vaccine and a cruise line impaced by a “false and misleading” article. “Ideally, plaintiffs will also be able to point to someone who sold securities of the company in the open market before the stock price fell because this helps the plaintiffs establish a motive for the alleged intentional wrongdoing,” the article explains. Additionally, careful disclures should help companies avoid laswuits, Priya explians. “Not everyone company that suffers a stock drop will find itself the subject of a securities class action suit. Plaintiffs will not be interested in suing everyone, and even the companies they sue may not end up paying the plaintiffs any settlements.”
Magnified by the uncertain financial markets and economic downturn, the developing coronavirus-related disclosure responsibilities pose Directors & Officers (D&O) risk for companies. According to a recent Law360 article, “failure to provide adequate ‘risk factor’ disclosures could invite litigation from investors in the event of a stock drop.” Coupled with record levels of class action filings, “event-driving” litigation and increased settlement amounts, the unchartered challenges of COVID-19 could make board members, executives and managers targets of claims. It could be argued they were “negligent or [breached] their fiduciary duties to the corporation, such as the duty of care, which obligates D&Os to exhibit prudent judgement.”
Additionally, the global impact and rapidly evolving development of COVID-19 makes it difficult for organizations to gauge the current and future operating impact from the crisis. Government mandates – lockdowns, quarantine orders, civil authority – can immediately alter a company’s operating status and uncertainty around how the virus will continue to spread raise the question of how often companies will need to update their disclosures.
3/20/20 | Brokers warn of big coronavirus hit to event insurance market
The global (re)insurance market is expecting limited losses due to coronavirus claims, but brokers warn that a heavy claims burden for the “already-stretched” event cancellation insurance market may be imminent. Although viral diseases and pandemic scenarios are typically excluded form event cancellation policies, these exclusions are often bought back for an additional premium, according to Tim Thornhill, director of sales, entertainment and sport at insurance broker Tysers. “The impact could potentially be enormous,” for the small, specialist event cancellation market, he explained.
To put into context, the largest potential impact would be cancellation of the 2020 summer Olympic games in Tokyo, July 24 – August 9,which has an event cancellation insurance limit of $800 million. While Tokyo’s contract with the International Olympic Committee does allow for a postponement in 2020, if all the covered events are cancelled, the reinsurer would face claims in the “medium-triple digit million” euro range, according to Munich Re reinsurance CEO Torsten Jeworrek.
General Coverage Information
COVID-19 Claims Denials? Not in China
In contrast to US and other insurance companies worldwide, Chinese insurers have promised to cover business losses from the COVID-19 pandemic, according to an article in the Wall Street Journal. Sixty-eight Chinese insurers so far have introduced products related to covering COVID-19 losses, including policies designed to “compensate individual employees for work stoppages, in addition to compensating their companies.” While promises from local governments to foot 50% to 70% of the policy premiums may help insurers stomach providing some of these policies free of charge, Chinese insurers also believe that this would be a good way to grow market share and burnish their reputation as good corporate citizens.
COVID-19 Forcing Claims Personnel to Adapt
Though fewer claims have been coming in due the severely decreased economic activity in the US and around the world, claims adjusters still face difficulties in adjusting to the demands of working from home and adjudicating claims when they may not even be able to do site visits. This has triggered a wave of companies incorporating tech into their claims processes. According to Ken Tolson, U.S. President of Crawford Claims Solutions, “Up until now, a lot of people have tinkered with it, but never really embedded it into their claims processes.”
Will Property Cat Reinsurance Have Much Exposure to COVID-19?
In an Artemis article released this week, experts dive into the question of property cat reinsurance exposure to COVID-19 claims. The general consensus seems to be that this particular line will see little impact from COVID-19 and the recession that comes with it. However, there are some questions over whether “silent” business interruption could open the way for claims.
RiskGenius, an Insurtech company using artificial intelligence (AI) to enable property and casualty (P&C) carriers to analyze policy language across an entire portfolio, recently announced announced the release of the company’s latest emerging risk checklist, which is specific to the COVID-19 pandemic. “Generally speaking, the insurance industry has a solid handle on Commercial Property policies and COVID coverage issues, Chris Cheatham, CEO, explained to The Council. “Between virus and communicable disease exclusions, and the requirement for physical damage, it is unlikely we will see much in the way of successful litigation. But — and this is a big but — state legislators have signaled a willingness to intervene and force coverage through commercial property policies. The RiskGenius team is actually more focused on Casualty policies and COVID coverage issues. We anticipate that a host of potential third-party, COVID-related lawsuits — Negligence, Product Liability, False Imprisonment/Wrongful Detention, Wrongful Eviction, and Defamation to name a few — will trigger insurance liability and litigation. It’s paramount that insurance professionals get a handle on Casualty policies and COVID coverage items.”
The American Property Casualty Insurance Association (APCIA) recently released a fact sheet breaking down how typical policies for several relevant commercial lines of business may (or may) not cover COVID-19-related losses. Specific lines covered are business interruption insurance, civil authority coverage, event cancellation insurance, liability insurance, supply chain insurance, and workers’ compensation. The APCIA also explores possible impacts COVID-19 could have on the industry, including the virus’ effect on the equity market and how disruption of the global supply chain could lead to higher costs.
Fitch Ratings Downgrades (re)insurance and Healthcare Sectors
On Friday, Fitch Ratings revised its outlook of the global (re)insurance sector from stable to negative due to increased concerns over COVID-19 and related impacts on the credit quality of reinsurers. In a statement, the agency said it is reviewing ratings relative to the effect of the pandemic on “capital markets, volatility, interest rates, market liquidity and insured claims/reserves.” Fitch also expects the ratings of some P/C insurers will be placed on “Rating Watch Negative.” The London market has also been added to the list of international insurance markets to watch, moving from stable to negative. Similarly, the ratings agency has revised the Rating Outlook for the U.S. health insurance industry to Negative from Stable, “due to expectations for an adverse effect on industry fundamentals related to COVID-19,” citing a weakening of profitability and debt service metrics driven primarily by increased claims costs associated with the pandemic, including testing, treatments and hospitalizations.
4/9/20 | E-Placement New Normal during Pandemic
At least in the Lloyd’s market, placing risks electronically has quickly become a way of life for the market since its underwriting floors closed on March 19. According to data released by Placing Platform Limited (PPL), Lloyd’s electronic placement platform, 5,600 risks were placed last week on PPL, a 55% increase from the week before. According to PPL Managing Director Susan Jakobek, “The experience is proving to be positive, with brokers commenting on the good response times from underwriters, and more brokers starting the process from quote.”
4/8/20 | COVID-19 Pandemic May Make “Challenging Market Conditions Even More Difficult,” Said AmWINS
According to an article in The Insurer, AmWINS recently released a report on the reaction of the Lloyd’s market to the pandemic. The report shows that Lloyd’s underwriters are not focusing on new business, but on managing their existing clients and accounts, and that employment practices liability markets withdrew from “new hotel, restaurant, retail and leisure business.” “We anticipate the EPL market to become more difficult, with higher rates and more exclusions expected if there is a recession,” AmWINS said. AmWINS also expects market hardening “to continue or even increase as underwriters’ investment income drops off with the current economic downturn.”
4/3/20 | Early Read on Broker Market in the Pandemic New Normal
Investment bank William Blair released a report offering a preliminary assessment of the broker market in the midst of the current crisis. To gain a picture of how the market was reacting to the sudden cessation of most market activity, the firm interviewed several broker and E&S executives. On a positive note, the report explains that during a recessionary environment, brokers tend to be good defensive stocks as their clients “tend to hang on to insurance coverage even in tough times.” Highlights included the fact that renewals were “holding up well” and retention rates were up, likely due to the fact that clients tend to hang on to insurance coverage during crises and want to get renewals taken care of. However, it was also noted that brokers with exposure to the small business market would probably be vulnerable if the economy is still weak in June/July, attributable in part to the social distancing measures leading to the closures of many small businesses. The report also mentioned that P&C rates for lines like Commercial Property, Umbrella, and D&O were continuing to increase, but aside from that, brokers will “see minimal impact to the first quarter as results were mainly baked in.”
4/2/20 | Renewals in the time of COVID-19
With shelter-in-place orders imposed in many countries due to COVID-19, agents/brokers, insurers, and insureds are all confronting the challenges of April 1 renewals in a time when site visits and face-to-face, in-person communication are no longer an option. An article from Business Insurance explores the ways that all parties are using technology, including negotiating through virtual meetings and offering drones to survey sites, to rise to the challenge. In addition to carriers offering policy extensions, Lloyds of London has seen use of their electronic placing platform, PPL, increase by 50% since its workers have moved to remote working, according to John Eltham of Miller insurance services. The underwriting process has also been hampered, as on site visits and engineering risks have been “difficult if not impossible” to conduct. That being said, underwriters have been showed flexibility by underwriting with information readily available information. If audits and site inspections are necessary, renewals will be done when people are able to travel more freely. Brokers are also helping clients deal with “massive changes in business levels and exposures in the middle of policy periods,” according to Robert Meyers of USI Insurance Services. “For mid-term, clients want to see return premiums because their exposures are way down,” Mr. Peiser said. “Insurers are taking everything into consideration on a case-by-case basis.” A company with an existing BI claim, for instance, could see lower claims payments form insurers in the next several months if it operates by a sector greatly impacted by the pandemic. This will continue to evolve, as major business interruption claims are typically updated on a month-to-month basis.
3/27/20 | Brokers urging clients to renew now rather than extend
While there is much noise around policy extensions and relaxed measures around renewals, brokers are urging their clients to proceed with renewals due to concerns that “pricing momentum seen over the past 18 months will increase as insurers get a better grasp on the impact of the coronavirus outbreak.” Although carriers have been generally open to extending programs to ensure continuation of coverage, market players are urging insureds to renew policies to the extent that they can. Additionally, the market is straining the industry’s ability to rely on its investment portfolio to help offset underwriting losses, fueling underwriters’ incentives to push for rate increases. This too is another reason why clients are better off renewing coverage now rather later, and agreeing to terms later in the year.
Small Business Losses from COVID-19 Could be up to $431 Billion, According to APCIA
The American Property Casualty Insurance Association (APCIA) released a statement on April 6 revising their estimate of closure losses for small businesses (100 employees or less). The new estimate ranges from $255 billion to $431 billion a month, compared to the APCIA’s previous estimate of $220 billion to $383 billion a month. As the monthly commercial property premiums about to around $6 billion a month, losses to small businesses could exceed that amount by 43 to 72 times.
AIR Worldwide Releases Newest Projections on COVID-19 Spread
Catastrophe risk modeling firm AIR Worldwide has released updated projections on the expected number of COVID-19 cases worldwide from April 1 to April 15. The model predicts between 3 and 10 million total cases globally (both mild/moderate and severe) of COVID-19 between now and April 15, with deaths ranging between 70,000 and 230,000. However, principal scientist at AIR Worldwide, Dr. Narges Dorratoltaj, cautions, “We estimate that this may represent a moderately conservative projection of cases. The vast majority will be asymptomatic or have mild symptoms.” The advisory also highlighted the “very large acceleration” in infections observed in the US—as of the morning of April 1, the US outbreak has metastasized to 163,199 confirmed cases, significantly higher than both China (82,631 confirmed cases) and Italy (101,739 confirmed cases), making the US the new epicenter of the pandemic. Dr. Dorratoltaj emphasized that if “containment measures—driven by international and/or local authorities—are successful, this could restrict the human-to-human transmission sufficiently to bring the eventual number of cases to or even below the low end of the modeled projected range of cases.”
Willis Towers Watson Updates Diagnostic Tool to Track COVID-19 Cases
As the pandemic worsens worldwide, it’s essential for agents, brokers, and their clients to have the most up-to-date information on COVID-19 cases in their countries. To that end, Willis Towers Watson has integrated a new feature into their Global Peril Diagnostic tool. This feature allows users to track ongoing development of the pandemic set against property assets around the world. Data at the province/state level is currently available for China, the United States, Canada, and Australia, and at country level for the rest of the world. “The economic impact of COVID-19 will clearly be significant, and organizations are under pressure to quickly identify and better understand their business interruption and workers compensation exposures triggered by this pandemic,” said Ben Fidlow, global head of Core Analytics, Corporate Risk and Broking, Willis Towers Watson. “Our new data- and analytics-driven feature will help clients through these efforts and enable them to enhance the practice of their proactive resiliency risk and business continuity decision making.”
Ways to Decrease COVID-19 Risk
“Flatten the curve” has become a common refrain of government officials as COVID-19 spreads throughout the US. Zurich North America has put out a piece detailing precautions businesses and healthcare organizations can take in order to mitigate COVID-19 risk. The article gives an overview of symptoms of COVID-19, guidelines for business in general on how to protect their employees, and offers advice for healthcare organizations on patient care, cleaning and disinfection, precautions for medical staff and home care, and suggestions for prevention of phishing attacks.
COVID-19: Active Crisis Management – What Lies Ahead?
Communications company Everbridge and risk and strategic consulting firm Control Risks partnered to present a webinar on active crisis management for businesses affected by COVID-19 and technology’s role in decision making and effective response to the ongoing crisis. The webinar provides an update on the current status of the crisis, and highlights how important information sharing and establishing a peer network for a shared source of truth is in addressing it. Using technology to build information networks can help companies learn from other companies in areas already affected by the pandemic, which can help with the development of response plans.
Trade Credit Insurance
Moody’s takes action on five trade credit insurers
Moody’s has downgraded five trade credit insurers it believes will be negatively impacted in a “severe stress scenario related to the coronavirus, including prolonged disruption to business and financial markets and higher claims rates than were observed during the 2008/09 financial crisis.” While Atradius, Coface, and Clal Credit Insurance were downgraded to negative, Moody’s expects Euler Hermes and ICIC to be similarly impacted, but will benefit from parental support “which will limit the impact on their credit profiles.”
Insurers Brace for Increased Trade Credit Claims
Despite an early prediction of minimal COVID-19 related claims in the commercial P/C space, due to various exclusions in business insurance policies, insurers are bracing themselves for an influx of trade credit insurance claims in the midst of large investment losses. As a global recession looms and stocks continue to plummet, rising insolvencies put industries of all kinds under strain. The $11 billion trade credit insurance market covers the risk that a company’s customers cannot pay for goods or services bought on credit. Corporate insolvencies was already a trend begun in 2019, according to insurer Euler Hermes, but expected to increase due to the global economic effects of COVID-19. Moody’s expects rising claims to hit three of the world’s biggest trade credit insurers Atradius, Coface and Euler Hermes.
4/29/20 | Illinois Business Groups Push Back on Expanded WC Protections
The Illinois Manufacturers Association and Illinois Retail Merchants Association have just filed suit against the Illinois Workers Compensation Commission (IWCC) in Illinois state court. The suit alleges that the emergency amendment enacted on April 13 exceeds the IWCC’s statutory authority, and seeks a judicial order blocking the amendment, which presumes that when a frontline worker is incapacitated by COVID-19, that exposure to the virus is causally connected to the hazards of the worker’s duties. The associations argue that such a substantive change, which could cost Illinois businesses billions of dollars, should be made through the legislative process instead of through administrative rules. As of April 24, a judge has issued a temporary restraining order halting the expansions.
Illinois WC Commission Repeals Expanded WC Protections
The Illinois Workers Compensation Commission (IWCC) has just unanimously voted to repeal the emergency amendment expanding workers compensation protections passed April 13. The move comes after two business associations filed suit against the IWCC in state court. According to Michael Brennan, chairman of the IWCC, ““We know that the litigation will be costly and it’s a cost that we quite frankly cannot afford today. We also cannot afford to have this up in the air for an extended period of time. Upon the repeal of the rule, we go back to the status quo.”
4/23/20 | NCCI: COVID-19 Legislative and Regulatory Activity Tracker
The National Council on Compensation Insurance (NCCI) has just released an updated version of their COVID-19 state activity tracker. The document keeps track of key COVID-19 related state legislation, regulation, bulletins, and executive orders, as well as other relevant activity.
COVID-19 Economic Impacts on Workers Compensation
Last week, the NCCI released a briefing on how the economic impacts resulting from COVID-19 would affect workers compensation premiums, claims reporting, and coverage. The briefing identifies a few key takeaways, including the fact that small businesses are at a great risk of closing permanently due to COVID-19, contributing to a wave of layoffs across the country. The briefing also notes that workers anticipating these layoffs “may defer or accelerate injury reporting, impacting claim frequency,” and additionally that “reduced access to medical care during the pandemic may increase the duration of existing claims.”
4/16/20 | Illinois Takes Action on WC Protection for Frontline Workers
The Illinois Workers Compensation Commission issued an emergency amendment yesterday that expands the definition of front-line workers who contract COVID-19 far beyond first responders and healthcare workers to include everything from grocery and pharmacy workers to hotel and funeral service employees. The amendment states that when a first responder or front-line worker is incapacitated by COVID-19 during a state of emergency, it is presumed that the exposure arose out of and in the course of the worker’s employment and is causally connected to the hazards of the worker’s employment unless proved otherwise. NJ State Senate President, Stephen Sweeney, said he plans to introduce a bill making it easier for essential workers in New Jersey to qualify for Workers’ Compensation after contracting COVID-19. Similar to Illinois, the bill would remove the requirement that workers must be deemed essential and prove they contracted the virus at work. “We’re asking them to go to work everyday,” Sweeney said. “We started with police and fire and all emergency responders. But think about the person working at the grocery store. They’re just as much on the front lines.” “If you were designated essential by the administration then you should be able to get workers’ comp,” he added. Legislators in a number of other states are reportedly considering introducing similar legislation. Like many of the other regulatory and legislative actions we are seeing come out of the states, this regulatory order (IL) and the legislative proposals appear to be hastily drafted, raising numerous questions, including concerns about over-breadth, administrative authority, and impact and interaction with other benefits and coverages.
4/15/20 | Workers’ Compensation: Frequently Asked Questions
The National Council on Compensation Insurance (NCCI) recently released an aggregation of responses to frequently asked questions the NCCI had received since the COVID-19 pandemic began. It covers whether or not COVID-19 is compensable, the reclassification of employees due to the shift of their roles during the pandemic, if providing payroll for employees that are at home but not working is included in premium calculation for workers’ compensation, and more.
Experts Express Uncertainty over Compensability of Workers’ Comp Claims
While business interruption coverage has been the focus of many discussions lately, workers’ compensation is a line that may also be implicated in covering COVID-19 losses. In a webinar held this week, “Workers Comp Management Amid COVID-19,” experts discussed uncertainties over the compensability of workers’ comp claims. Important issues raised were the fact that occupational disease claims rules vary by state, and the workers will have to prove they caught the disease while performing a duty unique to their work, which is difficult if not impossible.
A recent Crawford & Co white paper examines the impact of COVID-19 on employees and how Workers’ Comp may, or may not, come into play. Usually, the flu and other infectious diseases are not covered or accepted under workers compensation, and many states specifically exclude diseases from workers compensation.
However, there are exceptions for occupations where the exposure can be considered an occupational disease. In these exceptions, the employee must first prove that the disease was contracted within the scope of their employment and then as a direct result of their employment, which can be very hard to do in most cases. This report explores how and when Workers’ Comp claims may be valid, and how Workers’’ Compensation may overlap with general liability implications of occupational diseases.