The coronavirus has disrupted businesses across every industry sector, forcing operations to scale back, furlough staff, and/or temporarily close – resulting in a significant economic hit, to say the least. Among the many issues to become clear during this crisis is the increased role risk assessment and risk mitigation will play in business recovery and sustainability moving forward. Insurance agents will hold an even a greater role in helping businesses in the risk-assessment process.
Client Communication Is Key
Insurance professionals have been busy fielding calls and having Zoom sessions with clients to discuss their current program, how coverages work and if a specific claim is covered (think Business Interruption, Workers Comp and Event Cancellation, just to name a few), available premium discounts from insurers (auto insurance, for example), and how future Workers Comp premiums may be impacted as a result of decreased payrolls. Transparency and clear communication are critical along with the support of insurance carriers that can assist in clarifying gray areas that may or may not exist. For example, the applicability of Business Interruption (BI) insurance is front-and-center right now with class-action lawsuits being filed against carriers for claim denials. Explaining how BI works and how coverage is triggered is essential in clients understanding what the policy is and is not designed to do. (Most policies only cover physical damage to a property, not the loss of use of a hotel, restaurant or other building from a virus or pandemic.)
Upcoming Renewals, New Accounts
As renewals come up, now more than ever is the time to stress the need for risk assessment and risk mitigation as a central role in a client’s insurance program. Insurance placement for many businesses, particularly small firms, will go from a routine process to a comprehensive discussion with their managers and directors. Insurance agents and brokers along with their clients will be taking a robust, fresh look at all policies to uncover any blind spots and to discuss opportunities where coverage may step in.
For example, many small businesses go without Cyber insurance. COVID-19 exposed a number of cyber-related vulnerabilities for companies that shifted to remote-work during the pandemic and the ease with which criminals upped their tactics to leverage the confusion that takes place during a crisis. In addition to ensuring they have coverage, it’s critical clients also have a remote-work policy in place as part of their business continuity/risk management plan to boost cybersecurity measures for employees working from home.
Only about 30% of companies carry Business Interruption insurance, according to the Washington Post. Although coverage is not designed to cover virus-related shutdowns, it does cover loss of revenue due to physical loss to a property. This is an ideal time to ensure that clients and prospects have BI protection for potential future losses that would be covered.
It’s also time to underscore the need for management and boards to exercise their fiduciary duties and review the need for D&O insurance to protect against potential losses.
During the renewal process, there will be greater emphasis during client discussions on what each policy covers, policy coverage terms and conditions (especially any changes that may have altered coverage), deductibles and sublimits if applicable. Having a checklist that clearly outlines everything is helpful and also serves to document the review process with the client. Perform the same process with new accounts.
Distinguished and our carrier partners are available to work with you through this crisis and assist in clarifying any issues as you move forward with renewals and new business submissions. We will also continue to provide risk management information for you to make available to your clients to help control and mitigate losses.