Insurers respond to COVID-19 with host of relief initiatives

Insurance companies are working to alleviate the impact of the COVID-19 crisis by supporting their employees and distribution partners, donating money to global relief efforts and easing the financial burden on their customers.

Triple-I has published a fact sheet, Insurers Offer Forward-Looking Solutions for COVID-19 Recovery, which outlines how the industry is easing its customers’ financial burdens, working with government to create a COVID-19 Recovery Fund, and making sure it has the resources to pay future claims from events such as hurricanes, tornadoes, and wildfires.

Here are a few examples of what individual companies are doing:

Allstate will automatically cover customers who use their personal vehicles to deliver food, medicine and other goods for a commercial purpose. Standard personal auto policies typically exclude such coverage. This change will allow customers to serve those who depend on their services and support.

Allstate also announced a special payment plan to provide customers financial relief. The plan gives auto and homeowners policyholders the choice to delay two consecutive premium payments with no penalty. In addition, Allstate is pausing policy cancellations due to nonpayment during the declared COVID-19 state of emergency. This includes Allstate Business Insurance policies. 

Ninety percent of Allstate’s global workforce is working remotely. Allstate will continue to pay employees (full or part time) who can’t work remotely and have shelter-in-place orders during their normal work hours. Well-being services like telemedicine, prescription home delivery, and emotional and financial support lines are available to Allstate’s U.S. employees.

American Family Insurance along with the American Family Insurance Dreams Foundation, announced more than $4 million in support for COVID-19 pandemic relief and other non-profit efforts. Additional support from the Steve Stricker American Family Insurance Foundation is expected to push the total support to more than $6.8 million.

“The pandemic has left many struggling to meet basic needs while at the same time adapting to a new and unsettling normal,” said Maggie Pascaly, American Family community investment manager. “We want to help meet short-term needs of individuals, families and communities, while also addressing longer-term effects.”


The company’s employees and agency owners can support local organizations of their choice by using a 2:1 foundation match offered during a six-week time period beginning March 31. The foundation will match donations totaling up to $250,000, for a maximum additional investment of $500,000. Organizations that provide pandemic relief will be suggested for consideration.

Chubb announced that it is committing $10 million to pandemic relief efforts globally.  The support will go to people and programs providing emergency frontline services and for assistance to the most financially vulnerable members of the community who have been impacted the hardest by the pandemic. 

The company also announced that it will not conduct any layoffs of its employees while in the midst of the COVID-19 pandemic health crisis, and has added employee benefits such as additional sick days.

“We are committed to supporting people, business and communities most impacted by this global crisis,” said Evan G. Greenberg, chairman and chief executive officer.  “Our $10 million commitment will add to the urgent efforts required to meet the immediate health and nutrition needs of those most affected. Concerning our no-layoff pledge, we want our 33,000 employees around the globe to be assured that their jobs are secure at this difficult time.”

Travelers has initiated a distribution support plan to accelerate more than $100 million in commission payments to eligible distribution partners.

“As so many are facing a significant financial burden due to the COVID-19 pandemic, we want to show our agent and broker partners, many of whom are small business owners, our support at this challenging time,” said Alan Schnitzer, chairman and chief executive officer of Travelers. “Independent agents and brokers not only provide invaluable counsel and care to our customers but also play a critical role in the U.S. economy, and we are committed to standing by them.”

Bob Rusbuldt, president and chief executive officer of the Independent Insurance Agents & Brokers of America, said: “Travelers has always been the premier supporter of independent agents and brokers, and the Travelers Distribution Support Plan takes that support to a whole new level. We want to thank Travelers for their continued industry leadership.”

The commissions being accelerated were accrued in the ordinary course of business during the quarter ended March 31, 2020, and accordingly, this program will not have a significant impact on the company’s results.

MAPFRE, an insurance company based in Spain, is allocating 54 million euros to support customers and suppliers. This is in addition to 5 million euros recently donated to accelerate COVID-19 research in Spain.

More than 90 percent of MAPFRE’s 34,000 employees worldwide are working remotely to reduce the risk of contagion and to guarantee service to customers, who in Spain are being offered a free advisory service to learn how they can take advantage of the support that is on offer.

Tell us how your company is contributing to the pandemic relief efforts: communications@iii.org.

Auto Insurance Premiums Face Downward Pressure Due to COVID-19

Stay-at-home orders and other travel restrictions due to COVID-19 have limited the number of miles being driven and have consequently put pressure on auto insurers to rebate premiums or otherwise provide offsets, S&P Global Market Intelligence reports.

While U.S. private auto direct premiums written have not declined by more than 0.3 percent on a year-over-year basis in at least the past two decades, the pandemic risks maintaining this record. Certain state regulators and auto insurers are now taking steps to give financially burdened consumers additional time to make payments.

However, the article says, those steps may not be enough as public pressure increases. The Consumer Federation of America has proposed that auto insurers provide monthly offset payments to consumers to avoid what it alleged to represent the “windfall” profits  the industry would otherwise produce.

Related:

Coronavirus takes toll on U.S. auto sales

Workers Comp
Premiums Could Soar
With COVID-19 Claims

Health-care workers and emergency responders will benefit from rules eased in some states around workers’ compensation that will allow them to collect benefits if they can prove they caught Covid-19 on the job, Bloomberg reports.

But employers need to be aware of the changing rules and be prepared for the likely end result—skyrocketing premiums.

State workers’ compensation boards around the country are amending rules for benefits payouts to include health-care workers exposed to the virus and then quarantined. Attorneys are keeping a close eye on the questions, such as who should be eligible to receive benefits, how does a worker prove they caught Covid-19 on the job, and how will an influx of successful claims affect businesses’ premiums to insurance carriers.

Some say essential workers like grocery store employees and delivery workers also should qualify.

Related:

Advisen: COVID-19 prompts a host of questions for workers compensation cover

Triple-I: Insurers Offer Solutions For COVID-19 Recovery

U.S. insurers are meeting the challenges faced by their customers, communities, and employees amid the COVID-19 crisis, according to a fact sheet released April 3 by the Insurance Information Institute (Triple-I).

“The nation’s insurers continue to work actively on immediate and forward-looking solutions that will assist its customers and communities in recovering from COVID-19,” said Sean Kevelighan, CEO, Triple-I.

The fact sheet, Insurers Offer Forward-Looking Solutions for COVID-19 Recovery, outlines how the industry is easing its customers’ financial burdens, working with government to create a COVID-19 Recovery Fund, and making sure it has the resources to pay future claims from events such as hurricanes, tornadoes, and wildfires.

Immediate Customer Solutions: Insurers are offering payment relief and extending coverage to customers who are in financial distress while at the same time keeping its employees on the job to serve these same customers, the Triple-I notes.

Government-Backed Solutions:  Trade groups representing insurers have voiced support for the proposed COVID-19 Business and Employee Continuity and Recovery Fund. It would be financed by the federal government and provide essential funds to impacted employers and employees.

Facing Challenges Head-On: Workers compensation insurers in multiple states are covering the healthcare workers and first responders who face exposure to COVID-19 while auto, home, and business insurers are setting aside the resources needed to pay the claims arising out of future natural disasters even as insurer investment portfolios have faced their own headwinds. A Triple-I non-resident scholar predicted yesterday the likelihood of an ‘above-normal’ Atlantic hurricane season

Insurers have also contributed financially to food banks and organizations providing medical supplies.

RELATED LINKS:

Triple-I Presentation:   The Impact of COVID-19 On P/C Insurance

Triple-I Publication:     A Firm Foundation: How Insurance Supports the Economy

Triple-I Blog:                COVID-19 coverage
 

Health Insurers Waive COVID-19 Cost Sharing

UnitedHealthcare (UHC) this week became the latest major insurer to waive members’ cost sharing for COVID-19 treatments. The health insurer said it would waive the associated costs for members in its fully insured commercial, Medicare Advantage, and Medicaid plans.

UHC added that it’s working with interested self-funded employer plans to offer the same waivers.

Anthem announced similar steps, saying it would cover the cost-sharing for COVID-19 treatment through May 31 for its Medicare, Medicaid, individual market and fully insured employer plans. The insurer also said it was “strongly encouraging” its self-funded employers to adopt the waivers.

Anthem has also taken other steps similar to its peers in the industry, such as waiving the cost-sharing for testing and tele-health, and easing prescription limits.

Aetna, Cigna and Humana all previously announced they would waive members’ cost-sharing for COVID-19 treatment. These insurers also waived copayments and other cost-sharing for testing and telehealth visits.

Regional health plans are taking similar steps. Florida Blue announced Tuesday it would waive cost-sharing for treatment, as did Harvard Pilgrim Health Plan.

Proper decontamination before and after coronavirus exposure is crucial

While insurance policies might not cover the mitigation or cleanup costs related to commercial facility exposure to the coronavirus, preserving a healthy and safe place of business remains a critical risk management issue.

As the coronavirus (COVID-19) continues to spread rapidly around the world, it’s important to know what to do if someone carrying the highly contagious virus comes in contact with any of your facilities or those of your customers. Even the potential of your business premises being exposed to COVID-19 can create a possible need to engage risk mitigation efforts. Understanding the importance of utilizing a professional, credentialed decontamination contractor both before and after facility exposure is crucial to protecting your business.

Larry Thomas

“COVID-19 has presented new challenges for businesses around the world, and it’s necessary to understand the importance of ensuring the safety of all employees and customers,” said Larry Thomas, global president of Crawford Specialty Solutions, a division of Crawford & Company that includes Contractor Connection. Contractor Connection, an industry leader in managed repair services, provides insurance carriers, brokers and consumers a global network of more than 6,000 contractors vetted and managed for performance in residential and commercial work, including specialists in technical areas like cleanup after a biological event.

“Experts have warned that we have just begun to feel the impact of the virus in the U.S., and it is expected to continue to affect lives for the foreseeable future.”

With that in mind, it’s essential you ensure you are utilizing a decontamination contractor who is rigorously vetted, held to the highest standards, and professionally equipped to restore affected sites through proper remediation and containment procedures. Here are some best practices for how to approach this critical work while reducing risk for you and your customers.

Prevention protects you, your customers and others

Prevention is the first step toward reducing exposure to the virus. Even before an incident occurs, a decontamination contractor can work with your business to provide cleaning and disinfecting services designed to reduce the opportunity for infection and keep facilities operating longer. When administered by a trusted, licensed and insured provider, preventative cleaning provides a cleaner, safer work environment and enhances employee and customer satisfaction.

Decontamination services limit business interruption

If you or your customers’ facilities are exposed to coronavirus, legitimate decontamination services using proper techniques, equipment and materials, and following CDC, state and local protocols should be employed to restore your places of business back to operation as quickly as possible, limiting business interruption. Time is critical, so you should engage with a service that provides 24/7 assignment processing and emergency response.

Lance Malcolm

“Providing access to a rapid-response decontamination service can help reduce the potential impact of contamination in the workplace and return the environment to full operational status as quickly as possible,” said Lance Malcolm, U.S. president of Contractor Connection. “The focus must be on helping companies limit business interruptions and ensure that the affected facilities are completely safe for those who use them.”

Safe biohazard waste disposal reduces future risk of exposure

As part of decontamination services, it’s also important to utilize contractors trained to handle and properly dispose of biohazard waste, safely removing any affected materials from the facility. Services that provide quality assurance review and project monitoring ensure speedy completion and provide peace of mind knowing exposure to the virus has been properly reduced or eliminated.

P/C Insurance Group Puts Price Tag on Coronavirus Business Interruption

An Insurance Journal article estimates that business interruption losses from the coronavirus just for small businesses in the U.S. could be as much as $383 billion per month, or 50 percent of the total available for the industry to pay all claims.

According to American Property Casualty Insurance Association (APCIA), that is 10 times the most claims ever handled by the industry in one year. The industry processed more than three million from the 2005 hurricane season that included Hurricanes Katrina, Rita, Wilma and several other storms, the trade group said.

APCIA president and CEO David Sampson said the coronavirus loss estimate assumes as many as 30 million claims would be filed by small businesses that suffered losses from the pandemic.

While the industry has little business interruption coverage to offer for the pandemic, Sampson said the APCIA is willing to discuss “forward-looking answers that speed economic recovery from future pandemics” with lawmakers.

Insurers back COVID-19 fund

The Insurance Journal further reports that a coalition of 36 business groups, including the insurance sector, has sent the Trump administration and Congressional leaders a letter expressing support for a proposed COVID-19 Business and Employee Continuity and Recovery Fund, a new federal relief fund intended to help businesses and workers suffering losses from coronavirus pandemic shutdowns. The fund aims to help businesses retain and rehire workers, maintain employee benefits, and pay such operating expenses as rent. It also may provide money for payroll, lost income of sick employees, and lost business revenues.

Insurers and other businesses would help create a process for quickly reviewing and processing applications filed by companies seeking help. The relief fund would be managed by a special administrator within the Treasury.

Related:

Insurers may need 90-day-rule relief for COVID-19 premium grace periods

Resources for Conducting Successful Insurance Internship Programs During the COVID-19 Lockdown

By James Ballot, Senior Advisor, Strategic Communications, Triple-I

Gamma Iota Sigma Steps Up to Help Insurers and Students Stay Connected

In response to the Covid-19 crisis Gamma Iota Sigma (“GIS”), the insurance industry’s premier collegiate talent pipeline, will host a webinar, Delivering A Successful Virtual Internship Experience on Monday, April 6, 1:00pm-2:00pm (Eastern).

Through this interactive online session and its accompanying digital resources, GIS is stepping up in support of insurers’ efforts to conduct internships remotely at a time when physical workspaces are shuttered to facilitate social distancing.

The companion guidebook to this event, Virtual Internships A Guide for Employers, explains the tremendous value of remote internships and offers tactical guidance on how to rethink and rework internship programs to better suit today’s candidates for tomorrow’s workforce. The accompanying sample internship syllabus gives a practical framework for how to effectively and efficiently organize and administer remote internships.

GIS developed this campaign in response to disruption and dislocation created by the Covid-19 pandemic. By retaining and enhancing internship programs while college and corporate campuses are closed, organizations can get a head start in:

  • Entering an expanded talent pool that’s optimized to succeed
  • Finding candidates that can work independently, face a wide range of challenges and “think on their feet”
  • Building increased flexibility into existing programs to attract highly qualified candidates who otherwise would not be able to participate
  • Reducing costs associated with on-site internships
  • Positioning their brand and corporate values for future success in on-campus recruitment

But perhaps most the most important reason to do this: The 18-25 age cohort already learns, works, socializes and lives primarily online. Teens and young adults are a workforce prepared for the challenges of life during and after the COVID-19 crisis. Remote internships not only help students stay focused on their goals; they offer insurers an invaluable opportunity to adjust on the fly to the realities of our culture in the 2020s and beyond.

Today’s students are ready for this. Organizations like Gamma Iota Sigma are working to ensure that insurance businesses and our industry are ready for them.

2020 Hurricane Season Projected to Be “Above Normal”

The 2020 Atlantic hurricane season activity is projected to be “above normal,” according to Triple-I non-resident scholar Dr. Phil Klotzbach.

Dr. Klotzbach, an atmospheric scientist at Colorado State University (CSU), and his team have issued an early forecast of 16 named storms, eight hurricanes, and four major hurricanes for the year, with above-average probability for major hurricanes making landfall along the continental United States coastline and in the Caribbean.

A typical year has 12 named storms, six hurricanes, and three major hurricanes. Major hurricanes are defined as Category 3, 4, and 5 storms, where wind speeds reach at least 111 miles per hour.

The forecast is based partly on the fact that El Niño conditions are unlikely this summer and fall.

“El Niño is warmer-than-normal water in the Central and Eastern Tropical Pacific,” Dr. Klotzbach said. “When it occurs, it tends to increase upper-level westerly winds that tear apart hurricanes when the try to develop.”

The chart below shows 2020 hurricane probabilities for 18 coastal states.

A lot can change between now and the peak of the season though, so an updated forecast will be issued on June 4.

As is the case with all hurricane seasons, coastal residents are reminded that it only takes one hurricane making landfall to make it an active season for them. They should prepare the same for every season, regardless of how much activity is predicted.

For the full forecast report click here: 
https://tropical.colostate.edu/media/sites/111/2020/04/2020-04.pdf

For information on hurricane-proofing your home and business, check out the following:

Flood Policy Renewal Period Extended

The Federal Emergency Management Agency (FEMA) announced it is extending the grace period to renew flood insurance policies from 30 days to 120 days to help policyholders who may be experiencing financial difficulties due to the coronavirus pandemic. The extension applies to National Flood Insurance Program (NFIP) policies with an expiration date between February 13 and June 15, 2020.

Said David Maurstad, the FEMA administrator who oversees the NFIP, “We want to make sure that policyholders don’t have to worry that their policy will lapse during the spring flood season or into the start of hurricane season.”

Business Interruption Claims Related to COVID-19

By Michael Menapace, Esq. 

The COVID-19 pandemic is unprecedented in many ways.  The human toll is first and foremost on our minds (as it should be), but as an insurance professional, I’ll stay in my lane and address one of the economic impacts – business interruption. 

Businesses Looking to Mitigate Losses

Among the ways in which we are in uncharted territory is the scale of how businesses are impacted.  Unsurprisingly, in reaction to slow-downs and shut-downs in many business sectors, businesses are looking for ways to mitigate their losses or recover lost revenue.  One avenue that businesses are exploring is the availability of business interruption coverage under their property insurance policies.  Other potential claims include communicable disease coverage found in some policies purchased by hotels or event cancellation insurance, but those claims are beyond the scope of this article. 

Property insurance was designed originally to cover fire losses and similar losses of physical property following the Great London Fire of 1666.  Of course, property policies have evolved since then to cover additional risks including, in many instances, business interruption losses caused by physical damage to property.  A property policy may, for example, pay to repair the damage caused by a fire and may cover the loss of business during the reconstruction period.  But here’s the rub.  Are the business interruptions related to COVID-19 caused by physical damage to property?

Policy Language Will Control

The language of an insured’s policy will control whether COVID-19 interruptions are covered.  Unfortunately, much of the media commentary on business interruption claims related to COVID-19 has inappropriately treated all insurance policies as though they are identical.  Policyholders have a wide array of different policies they can purchase.  For example, some policyholders have purchased an ISO Businessowners Policy (BOP) with standard terms and exclusions, others have purchased all-risk policies, and others have purchased a variation of these types. 

This commentary does not try to provide sweeping pronouncements or give the impression that a single outcome will apply equally to all situations.  Instead, the following is a starting point for a more detailed analysis under individual circumstances.  Details matter and the analysis for a particular claim must start with the policy terms and facts specific to that policyholder.

Is Coverage Triggered?

There have already been a handful of lawsuits filed related to business interruption claims, some of which suits were filed before the insurers even denied a claim.  For example, the Oceana suit filed by a restaurant in NOLA and a suit filed by chef Thomas Keller, owner of The French Laundry in California.  Also, a group of tribal nations that own casinos filed a lawsuit in Oklahoma and the owner of a restaurant/movie chain filed suit in Illinois.  Policyholders in these lawsuits are seeking a ruling that they are entitled to coverage for losses sustained during their current shutdowns.  A review of the policies at issues underscores the point made above – the outcomes in these suits and others may not all be the same because different policies are at issue. 

Nonetheless, there are some overall issues to consider.  While the scope of business shutdowns is unprecedented, we do have similar experiences as a guide, albeit on a smaller scale, that may indicate how the current COVID-19 business interruption claims may play out. 

The threshold issue will be whether the insureds can prove that their business losses are caused by “physical damage to property,” which is the standard language in many business interruption policies.  While the concept of causation focuses on assigning blame for an accident in some legal contexts, it is important to realize that in the insurance context the issue of causation is different.

In insurance, the concept of causation addresses whether a particular loss triggers coverage, not who is responsible for causing the loss.  In this regard, we can replace the word “causation” with “trigger.”  So, the question with the COVID-19 losses becomes, can these policyholders prove that their business interruption losses were triggered by physical damage to property akin to the fire loss damage mentioned above?

Past Experience

A series of cases from Minnesota demonstrates how the COVID-19 business interruption claims might be resolved. 

Where there is direct physical loss to property, such as contaminated oats that could not be sold or a building rendered useless because of asbestos contamination, the courts have found that business interruption coverage was triggered.  That is, these losses fit the definition of direct physical loss to property.  General Mills, Inc. v. Gold Medal Ins. Co., 622 N.W. 2d 147 (Minn. Ct. App. 2001); Sentinel Mgmt. Co. v. New Hampshire Ins. Co., 563 N.W. 2d 296, 300 (Minn. Ct. App. 1997). 

But, where an earthquake caused a power loss in two Taiwanese factories, and as a result, those factories could not supply products to the Minnesota insured, the court found that the outages caused no injury to the Taiwanese factories other than a shutdown of manufacturing operations, and that this did not constitute “direct physical loss or damage.”  Pentair, Inc. v. Am. Guar. & Liab. Ins. Co., 400. F.3d 613 (8th Cir. 2005).

More recently, a federal appellate court considered a claim related to mad cow disease.  Source Food was a company that sold products containing beef tallow.  The USDA prohibited the importation of the tallow from Canada in 2003 after a cow in Canada tested positive for mad cow disease. The border was closed to Source Food’s sole supplier of beef product in Canada. There was no evidence that the beef product specifically destined for Source Foods was contaminated by mad cow disease, but after the border was closed to the importation of beef products, Source Food was unable to fill orders and lost business as a result.  Source Food submitted a business interruption claim.  It argued that the closing of the border caused direct physical loss to its beef product because the beef product was treated as though it were physically contaminated by mad cow disease and lost its function.  But, the court held that to characterize Source Food’s inability to transport its truckload of beef product across the border and sell the beef product in the United States as direct physical loss to property would render the word “physical” meaningless. Additionally, the policy’s use of the word “to” in the term “direct physical loss to property” was significant.  The court explained that the policy did not cover loss “of” property, it covered loss “to” property.  As a result, the cause of Source Food’s business interruption was the government shutdown of the border, not direct physical loss to its property.  Source Food Tech., Inc. v. U.S. Fid. & Guar. Co., 465 F.3d 834 (8th Cir. 2006).

What About the Current Claims?

Here, are the business interruptions related to COVID-19 the direct result of the government restrictions on businesses or are they due to the physical loss to their property?  Under the reasoning of the Source Food case, much of the current business interruption claims would seem not to trigger the standard business interruption coverage in a commercial business interruption policy or BOP.  As cautioned above, this is not a universal outcome under all policies.  For example, an all-risk policy would generally not distinguish between business interruption losses due to government action or direct physical loss because all-risk policies cover all losses except those specifically excluded.  While it is possible that an all-risk policy could specifically exclude losses due to civil authority orders, that is not a standard exclusion in all-risk policies.

With regard to business interruption policy exclusions, there are exclusions to consider even if a policyholder can meet its burden to trigger coverage under the standard business interruption policy.  For example, some policies have an exclusion that precludes coverage for losses that result from mold, fungi or bacteria.  However, because COVID-19 is a virus, that exclusion may not apply.  But, other policies have exclusions for viruses, diseases or pandemics.  That type of exclusion appears problematic for policyholders, even those who satisfy the initial question of causation/trigger.

The result may not be all-or-nothing.  Might claims be partially covered?  It is possible.  For example, if a restaurant were shut down because it had been contaminated by COVID-19 and needed to be cleaned and closed for a two-week period to ensure no lingering virus remained, that period of shutdown might be considered direct loss to property even though the shut-down period after the cleaning period was not covered because the following shutdown period was attributable to a government order.  Likewise, there may be a different analysis applied to some business interruption claims that result from supply chain impacts.  However, claims related to supply chain disruptions are beyond the scope of this article.

Legislation and Duties of Insureds

It is notable that legislators in several states recently proposed bills that would retroactively void the exclusions that would apply to COVID-19 business interruption claims.  Although well-intentioned, these bills are deeply troubling because, among other things, they could severely impact the financial stability of the insurance market, which took in premiums based on such claims being excluded.  And, because the legislation would not help the 60 percent of businesses that do not purchase business interruption coverage, the risk of crippling the insurance market is even more questionable.  Moreover, these bills would address only the exclusions and do nothing to impact the initial question of whether policyholders can trigger coverage.

Nevertheless, if a policyholder believes it may have a claim under its insurance policy(ies), it should provide prompt notice to its insurer(s) so that it does not risk a denial based on late notice.  Likewise, once the claim has been made, it is essential that the insured cooperate with the insurer, including providing timely proof of loss.

Michael Menapace

Michael Menapace is a Triple-I Non-Resident Scholar, a partner at Wiggin and Dana LLP, and a professor of Insurance Law at the Quinnipiac University School of Law.