At Risk Strategies, we work across a dynamic field of industries with clients that range from individuals to large corporations, and everything in between. Working with our clients through the COVID-19 crisis, we are seeing the full measure of liability and business interruption losses brought on by the pandemic. When it comes to finding solutions for insurance relief, there is no one-size-fits-all answer.
Film production companies, for instance, have a different set of challenges than those in construction, retail, or health care. We’re already processing hundreds of claims on behalf of our clients, and we’re learning from every situation and applying what we learn to our claims process.
While this pandemic requires daily triage to keep businesses afloat, it also demands that we look ahead to the insurance landscape of the future.
Prior to the coronavirus outbreak, we were already seeing a hardening of insurance markets. Now, add the financial pressure of a slowed-down global economy, and we expect that insurance companies will be under increasing pressure to protect their own balance sheets by carefully managing their underwriting choices. Ultimately, despite what many politicians and businesses may push for, insurers simply do not have the infrastructure to pay for every business interruption (BI) and liability claim filed as a result of virus. Below are the areas we are closely monitoring.
Workers’ compensation. While most claims right now are focused on BI, we expect to feel an impact down the road on workers’ comp claims for first responders, health care workers and other essential personnel like supermarket employees who may have become ill at work. Another issue we’re watching in this space are injured workers who couldn’t get elective medical treatment or physical therapy because traditional health care resources were redirected to treat COVID-19 patients. What are the ramifications for workers’ comp coverage during prolonged periods of being out of work because of the virus?
Class-action liability claims. Employers that were deemed nonessential, but continued to operate, like Amazon, will likely face a surge in claims against their liability. A lot of home delivery has continued throughout the shutdown in which workers may have chosen to work, but faced exposure along the supply chain. In a year’s time, how many millions of class-action liability claims will we see from truckers, home delivery workers, and warehouse workers who may have been put unnecessarily in harm’s way?
Additionally, the tens of thousands of workers who were deemed essential and had no choice but to go to work face another set of challenges. If they didn’t receive proper Personal Protective Equipment (PPE) on the job because it wasn’t available, and became ill as a result of their work, it opens the door to liability issues down the road.
Government response. Will legislators pass laws and apply pressure on insurance companies to cover claims? What sort of coordination will there be between state and federal government on the relief effort? How will distribution of money from the Coronavirus Aid, Relief and Economic Security (CARES) Act be handled, along with any other bailouts down the road?
Brokers need to address the individual situation for each client. Why did they shut down? What issues are they facing? Should they file a claim? Should they contact the Small Business Administration (SBA) to see if loans are available to them under the CARES Act?
While we are working to maximize coverage for our clients, we also understand that most policies weren’t intended to cover a global crisis of this scope. If you’re uncertain whether or not to file a claim, contact us.
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