Triple-I CEO Among Panelists Discussing Business Interruption Insurance Legislation
Triple-I CEO Sean Kevelighan today joined legislators and legal experts to discuss proposed measures that could retroactively rewrite business interruption insurance policies.
“The insurance industry is applying forward-thinking solutions to take care of its customers, communities, and employees during the COVID-19 crisis,” Kevelighan said, citing more than $10 billion so far returned to customers through premium relief; $200 million in charitable donations; and insurers pledging not to lay off employees during the crisis and implementing innovative solutions to conduct daily operations while respecting social distancing. “We’re deeply engaged in mitigating the economic impact of this pandemic.”
But the industry can only do these things – while keeping its promises to policyholders and preparing for impending catastrophes – if policyholder surplus isn’t eliminated, as it could be if some of the proposed legislative “solutions” were enacted.
Legislation has been discussed or introduced in Louisiana, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and South Carolina that would retroactively enact business interruption coverage into existing policies despite an absence of the physical damage required in property policies and/or express exclusions for communicable diseases in those policies.
Kevelighan explained how policyholder surplus provides a cushion that enables insurers to meet their obligations, even when large, unexpected catastrophes occur. He showed how retroactively rewriting insurance contracts could make it impossible for insurers to play their critical role as “financial first responders.”
The scenarios he discussed could cost the industry $150 billion and $380 billion per month – “quickly eliminating the surplus it has taken the industry centuries to accumulate.”
And they would do this in the midst of a tornado season that is shaping up to be the deadliest in eight years and as a “more active than normal” hurricane season approaches.
Kevelighan made his remarks during a webinar sponsored by the National Council of Insurance Legislators (NCOIL) and the Rutgers Center for Risk and Responsibility at Rutgers Law School. Other panelists included NCOIL President and Indiana Rep. Matt Lehman; New Jersey Assemblyman Lou Greenwald; and Jay Feinman and Adam Scales, Professors of Law at Rutgers Law School and Co-Directors of the Rutgers Center for Risk and Responsibility.
The panelists all expressed support for the creation of a COVID-19 Business Interruption and Cancellation Claims Fund, similar to the 9/11 Victims Compensation Fund enacted by Congress in 2001, for businesses suffering from costs related to the interruption of their businesses, as well as the many associations that have had to cancel events. Funded by the federal government and operated by a special federal administrator, it would facilitate distribution of federal funds and liquidity to impacted businesses during this time of incalculable business interruption.
Click here to view the presentation.
Insurers Respond to COVID-19 (4/24/2020)
The Insurance Industry Charitable Foundation (IICF), announced today that it has raised nearly $500,000 in just over 3 weeks through its national fundraising campaign, the COVID-19 Crisis: IICF Children’s Relief Fund.
IICF’s crisis relief campaign enables donors to focus resources on children at risk of food insecurity, educational disruption, family homelessness and other issues exacerbated by COVID-19. With the support of insurance companies, associations and individual industry professionals, funds raised will benefit 14 nonprofit partners operating throughout IICF’s four U.S.-based divisions.
Overall, U.S. insurers and their charitable foundations have donated approximately $220 million in response to the COVID-19 crisis. And well in excess of $100 million has been contributed internationally, according to Insurance Information Institute (Triple-I) estimates based on information collected by IICF.
Insurance industry contributions have gone beyond financial donations, as tracked by IICF. These efforts include:
- More than 400,000 masks donated to frontline healthcare workers
- An industrywide commitment to deliver more than 1 million meals to families in need
- Hosting blood drives
- Purchasing and donating to healthcare workers gift cards from small businesses
- Offering no-cost life insurance policies to frontline healthcare workers
- Providing additional time off to volunteer in the community
- Increased matching of employee donations to local charities
In addition, insurance companies have made commitments not to furlough workers due to the pandemic. And U.S. auto insurers will return more than $10.5 billion to their customers nationwide as part of their COVID-19 response, Triple-I estimates.
To donate to the IICF Children’s Relief Fund, please visit the IICF website and designate the region of the country you’d like to support.
“For more than 25 years IICF has marshaled the philanthropic will and resources of the insurance industry in support of communities. By uniting philanthropically through the industrywide IICF Children’s Relief Fund, we’re able to help children across the country be safer and healthier. “
Bill Ross, CEO, IICF
Donations can also be made directly to IICF here to support the organization on a national level with its mission to help communities in need.
To view a list of insurance organizations that have made philanthropic contributions related to COVID-19 please click here and view IICF Children’s Relief Fund contributors.
Coronavirus wrap-up: life and health insurance (4/22/2020)
Health insurance
Buying health insurance? What to know during the coronavirus pandemic
Care providers may need $100B more as industry faces further COVID-19 losses
What to Do if You Can’t Pay for Insurance Due to Coronavirus
Health Insurance Rates Could Be Weirdly Stable: Actuaries
How Will COVID-19 Affect the Health Care Economy?
Life insurance
Certain US life insurers suspend senior applications
Consumers Looking To Buy Life Insurance
More States Mandating Forgiveness On Life Insurance Premiums
Implications of coronavirus for North American life and annuities writers
What an Annuity Giant Is Telling Investors About COVID-19 Risk
CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/22/2020)
CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/21/2020)
CORONAVIRUS WRAP-UP: Data and Visualizations (4/20/2020)
The coronavirus crisis continues to generate data that can be valuable for understanding and decision making. Below are just a few resources that may be of interest to insurers and the people and businesses they serve.
| COVID-19 Mortality Projections for U.S. States |
| Graphs from the University of Texas COVID-19 Modeling Consortium show reported and projected deaths per day across the United States and for individual states. |
| The Verisk COVID-19 Projection Tool |
| The Verisk COVID-19 Projection Tool has been made available to enhanceunderstanding of the potential number of worldwide COVID-19 infections and deaths. It provides an interactive dashboard that leverages the AIR Pandemic Model. |
| How State Insurance Departments Are Responding to COVID-19 |
| This interactive map from PC360 highlights bulletins and procedures released by state insurance departments as of April 15, 2020. |
| Tracking U.S. Small and Medium Business Sentiment During COVID-19 |
| Small and medium-size businesses account for roughly 44% of the U.S. economy and provide employment to about 59 million people. McKinsey is tracking their sentiment to gauge how their views on economic activity, employment, and financial behavior—as well as their expectations about financial institutions and public authorities—change as a result of ongoing public and private interventions. |
Mixed ReactionsTo Workers CompCOVID-19 Expansions
State workers’ compensation boards around the country are amending rules for benefits payouts related to coronavirus, and several states have expanded or are considering widening access to workers comp coverage for COVID-19 beyond first responders and health care workers.
Kentucky and Illinois this week implemented emergency orders to provide access to public-facing essential workers, such as grocery, pharmacy, Postal Service and day care workers. And Minnesota’s legislature unanimously approved a bill that guarantees people in high-risk jobs who contract COVID-19 workers comp coverage without having to prove the infection was a direct result of their job. Most licensed peace officers, firefighters, paramedics, nurses, health care workers, correction officers, workers at secure state facilities, workers at long-term care facilities, and child-care providers are among the classes included in the Minnesota measure.
Lawmakers in Louisiana and New Jersey also have proposed legislation to expand COVID-19 coverage beyond first responders and health care workers, who traditionally are covered if they are exposed to a communicable disease in the course of their work.
While employee groups and unions applaud these moves, the changes could hurt the workers comp industry, some experts warn.
Robert Hartwig, clinical associate professor and director of the Risk and Uncertainty Management Center at the University of South Carolina in Columbia, said the changes present “a potentially enormous and unfair burden on workers compensation insurers that’s completely unprecedented in history.”
Hartwig pointed to the difficulty proving that the transfer of a communicable disease occurred on the job and added, “This is potentially extraordinarily costly to workers comp insurers, but also to many large employers who have either very high-deductible programs or are largely self-insured.”
He said these changes also could be “potentially catastrophic” to workers compensation state funds.
CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/17/2020)
Insurers Respond to COVID-19 (4/17/2020)
Auto insurance refunds
U.S. auto insurers will return more than $10 billion to their customers nationwide, according to an estimate released on April 11 by the Insurance Information Institute (Triple-I).
We’ve listed many of the companies that are offering refunds in a previous post. This week, several other auto insurers have announced refunds or credits. This is not an exhaustive list, 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.
Chubb‘s auto insurance clients will receive a credit reflecting a 35% premium reduction for the months of April and May, with additional discounts for subsequent months, as the situation warrants, upon renewal. Across Chubb’s portfolio, the average credit is expected to be $110 per vehicle.
COUNTRY Financial announced that every client with a personal auto insurance policy as of April 1, 2020 will receive a 15% refund for two months of auto premium in anticipation of a decrease in driving activity in April and May.
CSAA Insurance Group is giving a 20 percent refund for two months of auto premiums, March and April 2020.
ERIE has announced that lowering personal and commercial auto rates would be the best option for providing additional relief to customers. The company estimates the total rate reduction impact to be approximately $200 million throughout the 12 states and District of Columbia where ERIE operates.
Ohio Mutual Insurance Group is offering personal auto premium credits on more than 80,000 personal auto policies for an estimated total of $6 million. Ohio Mutual is voluntarily providing a 25% personal auto premium credit that applies to an 11-week period (March 16 – May 31, 2020) for all policies in-force on May 31. Credits will be automatically applied to customers’ first invoice after June 1. Those with a balance less than the credit will receive a refund by check.
The Hanover Insurance Group announced it has created The Hanover CARES Refund, through which the company will return 15% of April and May auto premiums to its eligible personal lines customers, providing financial relief during the coronavirus pandemic.
MAPFRE Insurance announced its Staying Home Refund program, which will return 15 percent of April and May premium to its voluntary personal auto policyholders in Massachusetts, totaling over $30 million. On average, most policyholders will receive a credit of approximately $40.00. A similar credit will be provided to the company’s personal auto policyholders in its other states of operation for the same time period.
Westfield announced a 15 percent policy credit to their eligible personal auto insurance customers for three months.
Supporting communities
Chubb has announced a support program designed to help ease the financial burden of the COVID-19 pandemic on its small business clients in the United States and provide direct support to healthcare workers and other front-line responders.
Chubb’s U.S. small business clients whose policies renew between April 1 and August 1, 2020 will receive an automatic 25% reduction in the sales and payroll exposures used to calculate their premium as well as a 15% reduction in premiums for their commercial auto insurance. In addition, Chubb will purchase $1 million in gift cards from small business clients around the country, which will be donated to healthcare workers and other first responders on the front lines of the pandemic in their communities.
Fundación MAPFRE, a global nonprofit foundation created by MAPFRE, announced it will donate $2.3 million to support urgent medical and community needs across Massachusetts, as the coronavirus continues to spread. The funding is part of a global $38 million aid package by the foundation for medical providers and communities around the world.
Hanover announced customer relief measures and a commitment to contribute $500,000 to nonprofits in local communities to address needs arising from the public health crisis.
State Farm has donated $1 million and partnered with Salesforce to provide one million masks and other protective equipment to healthcare workers in areas of urgent need identified by FEMA (Federal Emergency Management Agency). Since the start of COVID-19, State Farm has provided about $5 million in neighborhood relief across the country.
Swiss Re Group pledged to donate CHF 5 million to support the needs of people and communities affected by the COVID-19 pandemic around the world. Through its non-profit grant foundation, the Swiss Re Foundation, the funds will be distributed to organizations tackling the crisis, particularly in developing countries.
The Westfield Insurance Foundation is helping communities in Northeast Ohio and across the country by donating nearly $1.5 million dollars to nonprofit partners focused on family stability and disaster recovery. These dollars will help stabilize communities and help those who need economic support.