The effects of the COVID-19 virus are only beginning to be felt within our communities and across the nation. Both business leaders and employees are looking for answers to difficult questions as we work to control both the spread of the virus and the economic effects after its curtailment, resulting in significant insurance policyholder considerations in the immediate future. Insurance will have a significant role to play for our clients, our shared communities, and our nation as we look to restart the economy. We believe the most attention in the insurance world will be paid to business interruption, workers’ compensation, and health and medical-related coverages.
Before we get into the details, the most important advice we can offer is the most common in the world of insurance – read your policies very carefully, including all addendums, appendices, or other attachments. We cannot stress how important it will be for businesses and individuals to both know what is in their policies and understand their coverages and their exposures as we navigate one of the most uncertain markets experienced during our lifetime.
Policies providing for business interruption coverage will be one of the first places that many businesses look to for recovery. Many service-sector businesses have been crippled by the inability to both draw customers and employees to their business. We have already seen many inquiries on business interruption coverage in the market, though insurers are expecting a much lower number of claims to be triggered. Policyholders will want to read these provisions carefully, as many policies were written to exclude global pandemics from coverage after the 2009 H1N1 outbreak. Additionally, the standard for coverage under force majeure clauses could be challenging for businesses, as the U.S. common law requires these to be written very specifically to be covered. A careful review of these clauses will be required when working with insurance providers.
As the virus began its spread, life proceeded as normal for most of us at first. As more and more individuals became infected and before social distancing evolved into shelter-in-place orders, many of us continued to report to work. The Occupational Safety and Health Administration (OSHA) has designated COVID-19 to be a covered illness. This indicates to us that businesses could expect to see claims on their workers’ compensation policies. We expect this to be especially true for those workforces deemed to be “essential” by the local or federal authorities. These include doctors, nurses, law enforcement, firefighters, the waste disposal industry, and even accounting, just to name a few. As these individuals remain in place to continue providing service, these individuals will be in vulnerable positions.
Employers should review their workers’ compensation policies carefully to determine their potential exposure for employees who remain in the normal working environment during the COVID-19 containment period.
Health and Medical Coverage
For those employees and their family members who did not contract COVID-19 in an “on-the-job” circumstance, health and medical coverages will be utilized to address the costs of care. What these costs per person will amount to is not currently known and may vary widely based on the severity of symptoms, age, and medical history. Employers will need to be keenly aware of both their retainages and stop-loss options on these claims as well as any reinsurance coverages that may apply. Employers may also need to work with employees in helping them understand their responsibility for these claims after treatments as well. Lastly, employers and employees will want to know if and how extended stays in hospitals and new or unique treatment procedures will be covered under existing policies. Of all the coverages on this list, the health and medical insurance ramifications of COVID-19 are perhaps the most unknown. Employers with the ability should begin proactively reviewing policies, coverages, and understanding their labor exposures as a result.
Contact your CRI advisor for guidance in regards to insurance policyholder considerations as you navigate through these uncertain times. You can stay up-to-date with the latest information on how this pandemic may impact your business at CRI’s COVID-19 Resources page.