Monthly Archives: May 2020

Careers and Employment, Disaster Resilience, Insurance Industry

Insurance Careers Corner: Q&A with Demetrius Gray, WeatherCheck

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Triple-I’s “Insurance Careers Corner” series was created to highlight trailblazers in insurance and to spread awareness of the career opportunities within the industry. This month Kris Maccini, director, social media, Triple-I, interviewed Demetrius Gray, Founder & CEO of WeatherCheck.

WeatherCheck, an insurtech that analyzes weather data to help insurers predict severe weather impact to properties, was a finalist in 2019’s Resiliency Innovation Challenge.

Demetrius shared insights for building and growing his innovative business, and how he’s advising on severe weather prep amid the pandemic.

Demetrius Gray

Name: Demetrius Gray

Current Role: Founder & CEO

Years at WeatherCheck: 3.5

Tell us about WeatherCheck? What led you to found this company and build your career in insurance?

I was a storm contractor. I chased hailstorms across the continental United States. Most of my work was around understanding insurance losses, and it gave me an intimate knowledge, which I used to create WeatherCheck. While there are numerous weather-related sources, there wasn’t a great place to assess whether something was damaged or not. For example, would an event at a particular property rise to the level that the insured should file a claim?

The insurance industry today is already thinking about creating efficiencies in the claims process. We allow property owners to sign up on WeatherCheck, type in any address in the country, and it exposes severe weather loss associated with that property. We work from the premise that informed people make informed decisions. At our core, WeatherCheck works to give people quality information so that they can make the right decision at the right time.

We’re in the middle of a significant global catastrophe. How has this impacted your business and conversations around severe weather?

When the shutdown started happening [throughout the stay at home orders], we had conversations with emergency managers around the country on what does emergency management look like for people at home. Normally, they would be at their office and those structures are built and fortified better than the average single-family home in the country. What we have seen is an increase in overall hazard-related deaths this year. The 2020 tornado season has killed more people than it has in the past few years because people are sheltering in place at home and risk is greater. We are preparing for these insights now, and we expect to see even greater risks heading into summer heat waves.

There is also an infinite question about the current infrastructure. Normally, people are placed into shelters post event, but that infrastructure has been displaced largely because the volunteers have been displaced. The inverse of that conversation is that the risk has been shifted to commercial enterprises and hotels. If the hotels are closed, then it’s where do we shelter people who have been displaced? We’re encouraging community partners to have conversations with stakeholders around planning, including reopening hotels for evacuations quickly.

Over the next year, what is top of mind as you grow your business?

Partnerships are important. We have been working with partners across all sectors to continue to grow the product itself. How do we help individuals who don’t necessarily understand their risks or the policies that they’ve purchased to get what they need? The way we’ll do that well over the next 12-24 months is by partnering with stakeholders who also have interest in that same asset. Whether that’s mortgage companies, cities, or banks–that’s where we’ll be focused while continuing to represent the interests of the insurers.

What setbacks have you faced in building your business and how did you move past them?

We’re the only black-owned meteorology company in the entire country. You get a whole lot more ‘no’s’ than ‘yes’s’ and those answers are based on unconscious biases. We had to be very honest with ourselves about what are bias characteristics–whether it’s race, gender, location–and we had to decide in the business plan how we were going to overcome those biases. For us, it meant that maybe venture capital (VC) wasn’t going to be a strong path for us because the data doesn’t prove out that they would invest in a woman or minority-run company. We built a profitable business with strategy based on data and that also influenced what the product looked like.

Through this process, we decided to go direct to policyholders. The data showed us that policyholders are largely unbiased and that they want what they want when they want it. If you have what they want, they will forgo internal biases to make their buying decisions. By focusing on the data and taking out the emotion, it allowed us to see viable prospects up front.

What are your goals for the future in terms of where you want to take your career and your business?

In the future, I could see WeatherCheck offering other products and services to get the insured at a place of homeostasis that is far better than what it is today. If we look at the number of individuals who are underinsured for flood or underinsured for fire–the system really sits at the nexus of being able to drive some of that. We’ll probably see some unique boutique offerings come out of selling new insurance products geared at solving those challenges. We’ll be driving better data to continue to inform decisions. We’d like to empower agents and brokers throughout the country to do an even better job of keeping the insured better informed. Agents and brokers will play an impactful role in continuing to drive value. It is very personal when people have a loss from an event and that personal pipeline is a far better approach than a chatbot or AI.

Disaster Preparedness, Disaster Resilience, Insurance Industry, Webinars

Webinar: Building resilient businesses and communities in the time of COVID-19

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On May 14 the Insurance Information Institute (Triple-I), co-hosted a webinar with ResilientH20 Partners that focused on managing extreme weather events in the midst of the COVID-19 pandemic. The panelists discussed the changing role of stakeholders across the private sector, governments and non-profit/NGOs.  

The panelists drew from their backgrounds across government, business and insurance to discuss the immediate challenges stemming from the COVID-19 pandemic, the downturn in the economy, and near-term flood and storm threats. 

Click here to view a recording of the webinar.

Co-hosts:

  • Dr. Michel Léonard, Vice President & Senior Economist, Triple-I
  • Richard Seline, Managing Director, ResilientH20 Partners

Panelists:

  • Dr. Daniel Kaniewski, Managing Director, Public Sector Innovation, Marsh & McLennan
  • Jeff Moseley, CEO, Texas Association of Business
  • Katie Sabo, State and Local Leader, Managing Director, Public Sector Partnership, Aon

Moderator:

  • Chris Tomlinson, Business Columnist, Houston Chronicle

Some of the key takeaways include:

  • Having a business continuity plan is a must-have for any business
  • Flooding can occur anywhere (not just high-risk zones) – so getting flood insurance is crucial
  • In the midst of the pandemic, we can’t lose sight of the importance of investing in mitigation and resilience, which will help on a material level post-event
  • The COVID-19 crisis is putting unprecedented pressure on local governments – if private investors have ideas for disaster mitigation, especially ones where return on investment can be shown – now is the time to bring them, and they will be heard
  • Insurers are and will be playing bigger roles in partnering with local governments to build public/private solutions to disaster resilience

This webinar is the first in a new series of thought leadership sessions that aims to be a catalyst for public-private-partnerships focused on enhancing pre-disaster risk mitigation at each step of the resilience value-chain, from financing to development, management, technology selection and crisis-management.

The Atlantic hurricane season starts on Monday, June 1, but could get an early start this weekend with Tropical Storm Arthur.

Insurance Industry

U.S. Treasury weighs in on debate surrounding business interruption insurance

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The U.S. Treasury Department issued a letter to members of Congress on May 8 which argued that proposals to force insurers to retroactively change business interruption (BI) policies to pay losses arising from the COVID-19 pandemic threaten the ability of the industry to serve policyholders and might lead to the insolvency of the industry.

In the letter, Principal Deputy Assistant Secretary for Legislative Affairs Frederick Vaughan writes: “While insurers should pay valid claims, we share your concerns that these proposals fundamentally conflict with the contractual nature of insurance obligations and could introduce stability risks to the industry.”

He goes on to say that the Treasury will collaborate with insurer groups, federal lawmakers and states on “addressing losses attributable to the current and potential future pandemics.”

Insurance Industry

Insurance March employment figures at odds with other industries

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On May 8 the Labor Department reported that the U.S. labor market lost a historic 20.5 million nonfarm jobs in April, sending the unemployment rate to 14.7 percent. The worst affected sectors are leisure and hospitality, which lost 7.7 million workers.

Dr. Steven Weisbart, Triple-I’s chief economist, points out that the employment data for March 2020* for the insurance industry are startling largely because they are at odds with employment changes in many other lines of work.

  • Employment at property/casualty carriers held steady in March 2020 at 559,100–the same as in January and only 800 fewer than February.
  • Employment at life/annuity carriers held essentially steady in March 2020 at 347,600–the same as in October 2019 and down a bit from the 348,000-349,000 in November 2019 through February 2020.
  • Employment at health and medical insurance carriers rose in March 2020 to 585,100–its highest-ever level, up 1,500 from February 2020.
  • Employment at agencies and brokerages rose in March 2020 to 852,400–its highest ever level, up 1,700 from February.

* The insurance industry/sector-specific data are not seasonally adjusted and are one month behind the national data.

Business Risk, Workers Compensation

Workers Comp, Liability Next Up for Virus-Related Insurance Disputes

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Coronavirus-related insurance litigation is likely to move beyond business interruption coverage and into workers comp and general liability policy lines as states begin to lift restrictions on economic activity.

“There’s just going to be a bloodbath of litigation over the next 10 years,” former Mississippi Attorney General and counsel at  Weisbrod Matteis & Copley Jim Hood told Bloomberg Law this week. “Even if the governor tells you to open up, that’s not going to protect you from a lawsuit.”

The Trump administration and Republican lawmakers are insisting that an employer liability shield be included in the next round of pandemic relief legislation, but it’s unclear whether Democrats will go along with the idea.

Ask the Experts: The Impact of COVID-19 on Workers Compensation (Property/Casualty 360, May 7, 2020)

Bill to Boost Aid to Dependents of Workers Killed by COVID-19 (Business Insurance, May 6, 2020)

Workplace Testing Guide May Provide Target for Lawsuits (Business Insurance, May 5, 2020)

A Better Workers’ Comp System:  Silver Lining of COVID-19? (Property/Casualty 360, May 1, 2020)

California Facilitates Workers Comp for Virus Claims

California Gov. Gavin Newsom signed an executive order Wednesday that will make it easier for essential workers who contract COVID-19 to obtain workers’ compensations benefits. The governor said the order streamlines workers’ comp claims and establishes a rebuttable presumption that any essential workers infected with COVID-19 contracted the virus on the job. In effect, the change shifts the burden of proof that typically falls on workers and instead requires companies or insurers to prove that the employees didn’t get sick at work.

The California Federation of Labor, which asked for the change in a March 27 letter to the governor and legislative leaders, applauded the order. Dozens of business groups, led by the California Chamber of Commerce, pushed back last month on the labor federation’s request, saying the changes would force businesses to be the “safety net to mitigate the unprecedented outcomes of this natural disaster and the government’s response.”

Executive Order Threatens Stability of California Workers Compensation System (American Property Casualty Insurance Association press release, May 6, 2020)

California to Give Workers Comp to All Essential Employees Infected With Coronavirus (The Hill, May 6, 2020)

NCCI: Workers Comp Costs and COVID-19

If only 10 percent of health care workers contract COVID-19 and all of their claims are deemed compensable, workers’ compensation loss costs for that sector could double or even triple in some states, according to an analysis by the National Council on Compensation Insurance (NCCI).

Claims Journal reports that, in NCCI’s worst-case scenario, 50 percent of workers are infected and 60 percent of their claims are deemed compensable. That would result in $81.5 billion in increased costs —or two and half times current workers’ compensation loss costs — for the 38 states and District of Columbia, where NCCI tracks claims data. If eligibility is limited to first responders and healthcare workers and only 5 percent of those workers are infected, Claims Journal says, the increase in costs would be just $2 billion, assuming 60 percent of claims are paid.

From the Triple-I Blog:

ECONOMY STARTS REOPENING AMID NEW PANDEMIC PROJECTIONS

 

 

Business Insurance, Business Risk

Business Interruption Coverage: Policy Language Rules

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Whether business interruption coverage in property policies applies to COVID-19-related losses has become one of the dominant insurance debates during this pandemic. Lawsuits have been filed – some even before insurers have denied a claim – seeking to establish that policyholders are entitled to coverage for losses sustained during the current shutdowns. 

The debate often focuses on a simple phrase in the insurance policy: “direct physical loss or damage.” Business interruption coverage can apply to losses stemming from direct physical loss or damage. Losses that didn’t come from direct physical damages aren’t covered.

Michael Menapace, Esq.
Wiggin and Dana LLP

 “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,” writes Michael Menapace, a professor of insurance law at Quinnipiac University School of Law and a Triple-I Non-Resident Scholar. “But here’s the rub.  Are the business interruptions related to COVID-19 caused by physical damage to property?”

Insurers say no, arguing that “damage to property” requires structural alteration like one would find in a typical claim, where, say, a fire destroyed the interior of a building or wind damaged windows and furniture.

The virus, on the other hand, leaves no visible imprint. Left alone, it can’t survive long and, after it has perished, whatever it was attached to is as good as before. Even if some remediation is needed – like cleaning metal surfaces – insurers might argue that this is no different from cleaning dirt off a surface. They cite cases in which judges have ruled there’s no physical damage from mold if the mold can be cleaned off.

Departing from common sense

Others depart from this common-sense, legally recognized definition. Some plaintiffs’ attorneys argue that if coronavirus is not direct physical damage then insurers would not have created an exclusion for viruses in the first place. Many insurers added exclusions for losses from viruses and communicable diseases after the SARS outbreak in 2003. 

Policy language, Menapace says, controls whether COVID-19 interruptions are covered. Some policies have standard terms and exclusions, some provide “all-risk” coverage – covering loss arising from any fortuitous cause except those specifically excluded – and others are variations on these types.

“The threshold issue will be whether the insureds can prove their business losses are caused by ‘physical damage to property’,” he writes. 

In past cases, where there is direct physical loss to property – such as contaminated food that couldn’t be sold or a building rendered useless by asbestos contamination – courts have found business interruption coverage was triggered. But when an earthquake caused a power loss in two factories, courts found the only injury was a shutdown of manufacturing operations that didn’t constitute “direct physical loss or damage.” 

What About Current Claims?

Are business interruptions related to COVID-19 the result of the government restrictions, or are they due to the physical loss to their property?  Menapace writes that many of the current claims would seem not to trigger the standard coverage in a commercial business interruption policy, but he cautions that this might not always be the case.

A true “all-risk policy,” he writes, “generally would 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.”

But most commercial property policies aren’t true “all-risk policies”; instead, they typically cover business interruption losses “caused by direct physical damage to property” at or near the insured premises. 

“That will be difficult burden for policyholders to meet,” Menapace says.

Some policies exclude coverage for losses resulting from mold, fungi, or bacteria.  Because COVID-19 is a virus, that exclusion might not apply. Other policies exclude viruses, diseases, or pandemics. 

“If a policyholder believes it may have a claim,” Menapace advises, “it should provide prompt notice to its insurer(s) so 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.”

Resources:

Business Income (Interruption): Key Facts

The True Cost of Rewriting Business Income (Interruption) Policies

Triple-I Briefing: Surplus Is Key to Insurers Keeping Policyholder PromisesISO Excluded Coronavirus Coverage 15 Years Ago

Auto Insurance, Insurance Industry

Insurers Respond to COVID-19 (5/08/2020)

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Auto insurance refunds

U.S. auto insurers will return over $10 billion to their customers nationwide, according to an Insurance Information Institute estimate, in response to reduced driving during the pandemic.

We’ve listed many of the companies that are offering refunds here and here. These lists are not exhaustive, so be sure to check with your insurer to see if they are offering refunds or credits. All premium and rate adjustments are subject to regulatory approval.

On May 5, Allstate Corp. CEO Tom Wilson said the insurer would probably grant another rebate to auto insurance customers.  The second round of rebates would vary according to region. On April 6, the insurer announced that it would return more than $600 million in premiums to its policyholders because the nation’s drivers were traveling 40 percent to 55 percent fewer miles following stay-at-home orders. Wilson noted that American drivers are now traveling more miles than in mid-April, but the total is still 30 percent to 40 percent lower than before the pandemic. Wilson said the next refund would be more precise and that Allstate is now distributing the initial payback, which represents 15 percent of monthly premiums in April and May.

Horace Mann, a provider of affordable insurance for educators, is giving customers a credit of 15 percent of two months of auto premiums, as well as a grace period through June on auto, property, supplemental and life insurance payments; enhancing coverages, including extending personal auto coverage to those delivering food, medicine, and other essential goods; and including Identity Fraud Advocacy Services with its Educator Advantage Program for all home, condo, and renters customers to protect against the increased risk due to increased online activity.

Other customer support programs

Erie Insurance is adding gift card and gift certificate reimbursement coverage to the company’s ErieSecure Home® policies, in response to the recent changes affecting businesses across the United States. The additional feature, included at no additional cost, would reimburse customers for remaining balances on eligible gift cards that no longer can be used at independently owned and operated local businesses due to business closures.

Supporting communities

Foremost Insurance and Bristol West Insurance, members of the Farmers Insurance Group of Companies, announced they have contributed $500,000 to the Trusted Choice COVID-19 Relief Fund established by the Independent Insurance Agents & Brokers of America, Inc. (IIABA – Big “I”). The Fund provides economic aid to independent insurance agencies, brokerages, and their owners and employees affected by the COVID-19 pandemic.

Horace Mann donated $100,000 to DonorsChoose “Keep Kids Learning” fund, an initiative to help teachers equip the most vulnerable students with educational materials at home. The company provides free online teaching resources, to help teachers adapt to remote learning, and it supports a number of foundations in its home state of Illinois.

Reach out to us in the Comments section and let us know what your company is doing to help ease the impact of COVID-19.

Disaster Preparedness, Disaster Resilience, Floods

Triple-I Paper Looks at Convective Storms, Mitigation, and Resilience

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Severe convective storms—tornadoes, hail, drenching thunderstorms with lightning, and damaging straight-line winds—are among the biggest threats to life and property in the United States. They were the costliest natural catastrophes for insurers in 2019, and this year’s tornado season is already shaping up to be the worst in nearly a decade.

A new Triple-I paper describes how population growth, economic development, and possible changes in the geography, frequency, and intensity of these storms contribute to significant insurance payouts. It also examines how insurers, risk managers, individuals, and communities are responding to mitigate the risks and improve resilience through:

  • Improved forecasting,
  • Better building standards,
  • Early damage detection and remediation, and
  • Increased risk sharing through wind and hail deductibles and parametric insurance offerings.

The 2020 tornado season coincided with most of the U.S. economy shutting down over the coronavirus pandemic. This could affect emergency response and resilience now and going into the 2020 hurricane season, which already is being forecast as “above normal” in terms of the number of anticipated named storms.

Business Risk

Economy Starts Reopening Amid New Pandemic Projections

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Business interruption insurance and liability issues remain on the front burners as governments begin gradually “reopening the economy” amid scary new projections about the pandemic.

Trump Says Task Force Will Wind Down (The New York Times, May 5, 2020)

Pennsylvania’s Coronavirus Death Toll More Than Tripled in New Projection (Lehigh Valley Live, May 5, 2020)

Models Project Sharp Rise in Deaths as States Reopen (The New York Times, May 4, 2020)

D.C. Business Interruption Insurance Move on Hold

A measure that would make it easier for small businesses in Washington, D.C. to claim coronavirus-related damages under business interruption insurance policies is on hold after six of the 12 D.C. Council members raised concerns about its legality and the costs it could impose on insurers.

Council Chairman Phil Mendelson struck the language from a broader pandemic emergency bill to allow for more debate. Councilman Charles Allen had spearheaded the measure after many small businesses have seen their insurers deny such claims.

The American Property Casualty Insurance Association estimates local businesses could claim losses of hundreds of millions of dollars each month.

“These numbers dwarf the premiums for all relevant commercial property risks in the key insurance lines for D.C., which are estimated at $16 million a month,” David Sampson, the association’s president and CEO, wrote in a statement. “We oppose constitutionally flawed legislation that retroactively rewrites insurance contracts and threatens the stability of the sector, to the detriment of all policyholders.”

Lloyd’s Syndicate Slams ‘Direct Physical Loss’ Claim in COVID Suit (Business Insurance, May 6, 2020)

Coalition Proposes Recovery Fund to Help Businesses During COVID-19 (Property/Casualty 360, May 5, 2020)

A.M. Best: BI Insurers Face ‘Existential Threat’ if Forced to Cover COVID-19 (Best’s Insurance News & Analysis, May 5, 2020)

Utah Governor Signs Bill Shielding Businesses, Property Owners from Coronavirus-Related Suits (The Salt Lake Tribune, May 4, 2020)

Managing Risk as Businesses Reopen After COVID-19 (Property/Casualty 360, May 4, 2020)

U.K. Companies to Shun Business Interruption Insurance (Financial Times, May 3, 2020)

Care Homes Seek Shield From Lawsuits

Faced with 20,000 coronavirus deaths and counting, the nation’s nursing homes are pushing back against a potential flood of lawsuits with a sweeping lobbying effort to get states to grant them emergency protection from claims of inadequate care.

The Associated Press reports that at least 15 states have enacted laws or governors’ orders that explicitly or apparently provide nursing homes and long-term care facilities some protection from lawsuits arising from the crisis. And in the case of New York, which leads the nation in deaths in such facilities, a lobbying group wrote the first draft of a measure that apparently makes it the only state with specific protection from both civil lawsuits and criminal prosecution.

Feds Consider Relaxing Infection Control in U.S. Nursing Homes (USA Today, May 5, 2020)

1,700 More Nursing Home Deaths From COVID-19 Now Reported in New York (CNY Central, May 5, 2020)

The Grim Post-COVID-19 Future for Nursing Homes (Forbes, May 4, 2020)

Data Shows Reach of COVID-19 in Illinois Nursing Homes: At Least 286 Deaths (Chicago Tribune, April 19, 2020)

Auto Insurance, Insurance Industry

How are consumers perceiving auto insurance during the COVID-19 crisis?

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Since people are driving less in the midst of COVID-19 related stay-at-home orders, many auto insurers have responded with premium refunds totaling about $10 billion.

How are consumers reacting to these refunds? A May 5 webinar co-hosted by Cambridge Mobile Telematics’ (CMT) VP of Insurance & Government Affairs, Ryan McMahon, and J.D. Power’s VP of Insurance Intelligence, Kyle Schmitt, shed light on this question.

J.D. Power has been conducting consumer sentiment surveys since March 24. Schmitt said that one key takeaway is that in light of pandemic related layoffs, customers are thinking pragmatically about auto insurance, so the timing of the premium relief announcements was excellent. However, it’s important to note that auto insurance is not top of mind for many consumers struggling to keep the lights on or food on the table, and not everyone is aware of refunds.

Here are a few other key takeaways:

  • McMahon noted that while miles travelled are down, speeding and distraction both peaked in April based on CMT’s analysis, and fatalities are up.
  • Schmitt said that changes in price stability driven by broad market conditions (such as accident frequency) are not well received by consumers who will shop around in response; in contrast to price increases driven by a life event or an accident which consumers tend to take in stride.
  • When it comes to telematics, value is key. Consumers expect to continue to not drive as much in the foreseeable future and are thinking about the cost savings offered by telematics programs, therefore interest in telematics has spiked according J.D. Power surveys.
  • Of those that think their driving rates will remain low 40 percent are interested in telematics.

The panelists were also asked to speculate about possible increases in fraud, and McMahon said that fraud activity always comes with economic reductions, however it’s possible that fraudulent claims may be easier to spot because there are fewer claims.