Tag Archives: Covid-19

Disaster Preparedness, Disaster Resilience

Laura and Marco Set Sights on Northern Gulf Coast

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Tropical storms Laura and Marco are expected to hit the northern Gulf Coast within a few days of each other. Marco was a hurricane on Sunday but has weakened considerably due to strong southwesterly wind shear. 

While Marco’s wind threat has diminished, heavy rain of three to six inches, with small areas potentially receiving 10 inches of rainfall are possible along the north-central and northeast Gulf Coast, according to the National Hurricane Center.  Storm surge of two to four feet also is possible from Morgan City, LA, to Ocean Springs, MS.  Marco is expected to make landfall later today in southeast Louisiana.

Following close behind is Tropical Storm Laura, which forecasters say may intensify to a Category 2 hurricane by the time it makes landfall along the northwestern Gulf Coast.

Residents along the Louisiana coast were urged to prepare for hurricane conditions, and Gov. John Bel Edwards called on them to begin sheltering Sunday evening.

“If you’re in duress and need help, we’re going to get to you as soon as possible,” Edwards said at the state’s Emergency Operations Center, where officials were tracking and preparing for the storms. “But as soon as possible may be longer than it normally is.”

The National Weather Service warned Sunday that the stronger Laura could bring more significant impacts across southern Louisiana because of its potential for higher winds and storm surge and because preparing for Laura will likely be complicated by lingering impacts from Marco.

Texas Gov. Greg Abbott on Sunday declared a state of disaster for 23 counties and requested assistance from the federal government. If Laura were to make landfall in Texas, it could mark the second significant disaster during the 2020 hurricane season for Texas, following Hurricane Hanna dumping more than 15 inches of rain on South Texas in late July as the region was a deadly coronavirus hotspot. The COVID-19 pandemic remains pervasive in Texas, killing at least 200 people every day for the last three weeks, and Abbott reminded the public on Sunday to adhere to mask wearing, social distancing, and other health guidelines.

South Texas cities were the first to deal with a hurricane during the coronavirus pandemic, tweaking shelter practices to have adequate distancing between evacuees and outfitting first responders with protective equipment in order to follow safe coronavirus health guidelines from the Centers for Disease Control and Prevention.

Residents are strongly encouraged to prepare for these and other storms during this “extremely active” hurricane season – particularly with the additional challenge of COVID-19.

Hurricane preparedness guidance is available from Triple-I here.

Insurance considerations

Wind-caused property damage is covered under standard homeowners, renters, and business insurance policies. Renters’ insurance covers a renter’s possessions while the landlord insures the structure.

Property damage to a home, a renter’s possessions, and a business – resulting from a flood – is generally covered under FEMA National Flood Insurance Program (NFIP) policies, if the homeowner, renter, or business has purchased one. Several private insurers also offer flood insurance.

Private-passenger vehicles damaged or destroyed by either wind or flooding are covered under the optional comprehensive portion of an auto insurance policy. Nearly 80 percent of U.S. drivers choose to purchase comprehensive coverage.

Auto Insurance, Homeowners Insurance

Getting the right insurance for moving

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For a variety of reasons, many people have moved during the pandemic. One in five U.S. adults either changed residence due to the pandemic or know someone who did, according to a Pew Research survey. There are many safety factors to consider if you are moving, and it’s also important to understand how insurance protects your possessions before, during, and after a move.

Loretta Worters, Vice President Media Relations, Triple-I, has put together this comprehensive explanation of how insurance covers you when you move.

What’s Covered/What’s Not

Homeowners and renters policies provide coverage for belongings while they are at a residence, in transit, and in storage facilities — but they will not pay for any damage done to personal property while being handled by movers when packing or moving the items. 

Types of Coverage to Consider When Moving:

  1. Trip transit insurance covers personal property for perils including theft, disappearance, or fire (the same perils covered by homeowners or renters policy) while in transit or storage. Trip transit insurance can be written for the full value of the property or as excess coverage over and above that provided by the moving company. It does not, however, cover breakage or flooding at, say, a storage facility.
  2. Special perils contents coverage will cover breakage of all but fragile items.
  3. A floater will fully protect high-value items, such as jewelry, collectibles, fine art, etc. 
  4. Storage insurance is also important should someone need to temporarily or permanently store items before or after a move.

Coverages Available Through Moving Companies

The type of liability coverage a moving company offers for damage or breakage is not technically insurance and therefore is not governed by state insurance laws. Under federal law, however, all interstate movers must offer two different liability options—full-value protection and released-value protection. Most movers offer both options for intrastate moves, as well.  It’s important to understand the various types and levels of protection available and the charges for each option.

  • Full-value protection is a plan under which the mover is liable for the replacement value of the belongings in a shipment. If personal property is lost, destroyed, or damaged while in the mover’s custody, the company will repair or replace the item or make a cash settlement for the cost of the repair or the current market value. The cost for full-value protection liability coverage varies by mover; different deductibles are available, which will reduce or increase the price. Note that full value liability is more expensive and is the default.
  • Released-value protection is offered at no additional charge beyond the moving fee. However, it provides only a minimal protection—no more than 60 cents per pound per article. So if the mover loses or damages a 10-pound stereo component valued at $1,000, the homeowner would only receive $6.00 in compensation (60 cents x 10 pounds).
  • Separate liability coverage may be offered by a mover to augment released-value protection for an additional fee. If this extra coverage is purchased, the mover remains liable for the amount up to 60 cents per pound per article, but the rest of the loss is recoverable from the insurance company up to the limit of the policy purchased. The mover is required to issue and provide a written record of the policy at the time of purchase.

Check Professional Mover’s Agreement

Homeowners should review the mover’s contract and ability to:

  • Determine exactly what kind and how much coverage the moving company provides for property loss and/or damage.
  • Review the contract carefully for the estimated value of your possessions and match it to the homeowner’s list. An up-to-date home inventory will make this task easier. 
  • Find out the maximum value of the mover’s insurance should goods be damaged.
  • Check that the moving company’s policy includes coverage for damage done to the homeowner’s premises—both the house they are leaving and the one being moved into.
  • Know what the time limits are for filing claims with the mover and decide whether they are reasonable—take time to unpack and check for potential damage.

Moving Yourself
If you choose to move yourself, you won’t have the benefits of a moving company’s coverage if belongings are damaged or broken. To be protected:

  • Consult with an insurance professional and review the trip transit, special perils, and floater options.
  • Buy the optional collision damage waiver coverage from the rental company if renting a truck.  Collision and comprehensive coverage likely will not transfer to a non-owned moving van, only to a private passenger vehicle.


New Home, New Insurance

If moving to a new state, or even from a city to a suburban area, a new home insurance policy will be needed.  That’s because a new home is a different property with different risks, which means different coverages may be required. The cost of the policy also may vary. For example, a larger home in a coastal area will likely be more expensive than a small apartment in an inland city. 

When buying a new home, consider insurance costs.  Rates are based on many factors, including square footage, geographical area (is the home in a flood, earthquake or hurricane-prone area of the country?); the age and construction of a home (is it brick or wood shingle?); roof condition; proximity to a fire station; and credit history.  Notify the insurer about a new address and make sure to inquire about possible savings on home and auto premiums for features like a shorter commute, a gated community, or lower-crime area than previously, alarms, or other security systems. 

The same holds true for car insurance. That’s because a new state may have different requirements or factors that result in a different policy cost. Even if moving within the same state, insurance carriers should be notified to ensure policies are up to date.

In-State vs. Out-of-State

An out-of-state move can have big implications, because not all insurance agents or companies are licensed to write policies in every state. Insurance requirements may also vary across state lines Call your agent to see if the current company can write policies in the state they are moving to. If not, consider it an opportunity to shop and compare new policies.

When to Make the Switch

In most cases, the new owner will need to have proof of insurance at closing when buying the new home. An insurance agent should be notified well in advance of closing and providing a timeline for the move so coverage is in place at the appropriate time.  Depending on the insurer, coverage on the former home will generally remain in effect until the sale of the property is complete, as long as premiums are paid, which should be confirmed with the insurance agent.

Vacant Homes

If the homeowner relocates before the existing home is sold and it remains vacant or unoccupied, there may not be coverage under the existing homeowners policy. Insurers typically discontinue coverage on a home if it has been unoccupied for more than 30 days, so prospective homeowners should explore other options with their insurer.

Careers and Employment, Insurance Industry

Insurance Careers Corner: A Few Minutes with Anisha Navendra, Insurance Industry Charitable Foundation (IICF) intern

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

It’s an understatement to say that the COVID-19 pandemic has affected all areas of our personal and professional lives. Amid widespread disruption, however, people are stepping up with innovative ways to overcome the distance of “social distancing.”

For insurance businesses, summer internships have long provided a vital path for educating students about the industry, and for insurance businesses to evaluate promising recruits. However, with lockdowns and other measures to contain the spread of Coronavirus extending through and beyond the summer months, many businesses were forced re-evaluate internship programs, with some considering suspension of 2020 summer internships. 

Several organizations have stepped in to fill this gap, including insurance businesses, industry trade groups, and in particular, Gamma Iota Sigma (GIS), a student society with 77 chapters serving more than 5,000 members across North America that’s recognized by many as “the insurance industry’s premier collegiate talent pipeline.”  Earlier this year GIS launched their Virtual Internships program. Despite getting a somewhat late start, the program placed more than 65 students on 30 projects at 14 insurance businesses.

As part of the Triple-I Blog’s “Insurance Careers Corner” features series, we spoke with student interns about their experiences during summer 2020 and their insurance career journey so far. We also reached out to internship program directors to get a fuller sense of how their organizations benefit from expanding outreach to students even in the midst of a pandemic.

First up is Anisha Navendra, who is a rising sophomore at University of Texas, Austin. Anisha spent part of the summer of 2020 interning at the Insurance Industry Charitable Foundation’s (IICF) Southeast Division. She’s double majoring in Mathematics with a concentration in Actuarial Science and Finance—and has “a keen interest in the insurance industry.”

Name: Anisha Navendra

Current Status: Rising Sophomore, The University of Texas at Austin

Internship: IICF

Triple-I: Tell us a bit about your experience as an intern. Did you have an internship lined up before schools and offices went into COVID-19 isolation?

Anisha: I was looking into internships earlier this year, but by the time classes went remote many programs were either suspended or cancelled. Gamma Iota Sigma stepped in to find ways to connect students with insurers and insurance businesses. My internship with IICF is an opportunity to learn more about the unique philanthropic side of the insurance industry by allowing me to spend time working closely with industry professionals.

How long is your internship with IICF and what sort of work are you doing there? 

My internship runs through August. I’m assisting with a wide variety of projects, including pulling and researching financial reports for insights into how a charitable foundation works.  

What skills and knowledge are you picking up along the way?

I’m learning more about teamwork, communications, doing due-diligence, time management and research skills, as well as how to use tools of the trade, like Microsoft Office. Also, I’m meeting and networking (virtually) with a lot of insurance professionals from different backgrounds and getting exposure to a wide range of business areas–marketing, finance, operations.

I plan to use these skills and the knowledge gained about insurance and the insurance industry to help me in my future endeavors as an actuary, or financial consultant.

When did you first consider insurance as a career path?

I became more aware of insurance as a member of my high school debate club (the topic was health insurance). Entering college, I discovered how actuarial sciences aligned with my other interests.

Any “surprises”; things you did not expect to learn or do?

Working with IICF has shown me a unique and more creative side of the business and how the industry’s charitable activities are helping to redefine the narrative about insurance. I’m also learning how companies are reacting to the pandemic—and that insurance is nimble and responsive.  It’s exciting to be behind the scenes at a non-profit.

How will this experience affect you going forward—both in your studies and in preparation for life after college?

Working with IICF has encouraged me to be more innovative and team oriented. The experience has made me want to learn more about non-profits and has gotten me interested in marketing and brand strategies. I plan take more classes in business law and ethics to round out my knowledge.

Business Insurance, Business Risk, Emerging Risks

U.K. Business Interruption Litigation Seems Unlikely to Affect U.S. Insurers

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The Financial Conduct Authority (FCA), which regulates insurers in the United Kingdom, has indicated that it doesn’t believe COVID-19-related losses trigger most business insurance policies because such policies typically require a direct connection between financial loss and physical damage to the insured property.

Think fire, flood, wind, or earthquake damage.

The FCA is now litigating a test case involving policies of eight insurers that don’t require property damage to trigger coverage (Hear a three-minute explainer from the Centers for Better Insurance).

Is this case relevant to U.S. property/casualty insurers? It depends on whom you ask.

The FCA is looking at 17 policy wordings from the eight insurers and asking whether COVID-19 triggers a payout. Based on other policies the regulator has studied, the Financial Times reports, the court’s ruling are “expected to apply to nearly 50 insurers, who sold coverage to 370,000 customers.”

Senior executives from specialist insurance and reinsurance underwriter Hiscox Group warned that the FCA’s eventual findings could drive additional COVID-19 losses to its reinsurance book, Artemis reports.

Tom Baker – an expert in insurance law and policy at the University of Pennsylvania – called the U.K. case a “one-way ratchet” for U.S. insurers.

“If the carriers lose or end up having a lot of coverage, that’s going to be bad for them here” in the United States,  Baker said. “I think if the carriers win, the insurance policies [in the U.K.] are really different. They tend to be named-peril, rather than all-risks policies. I think it will be easy to distinguish them.”

Jason Schupp, founder and managing member of Centers for Better Insurance, disagrees that an adverse ruling for U.K. insurers will have much of an effect on their U.S. counterparts.  

“In Europe, [FCA] authorization to provide miscellaneous financial loss insurance allows an insurance company to write business interruption insurance that does not require evidence of property damage” to pay a claim, Schupp says. Even though the United Kingdom is no longer part of the European Union, Schupp says, “U.K. law itself recognizes the miscellaneous financial loss class of insurance.”

What does this mean for pandemic business interruption coverage in the United States? Not much, according to Schupp.

“The outcome of the U.K. litigation is unlikely to be relevant to the dozens – or perhaps hundreds – of business interruption lawsuits making their way through U.S. courts, where the property damage question is front and center,” Schupp says.

He goes on to say that proposals coming out of Europe or the U.K. for pandemic insurance going forward – such as a Lloyd’s framework – contemplate non-property-damage business interruption insurance solutions…. These proposals do not appear compatible with the current U.S. insurance regulatory system.”

A ruling by the FCA is expected in mid-September. Last week, the regulatory body said that, while the case doesn’t address how any resulting claims payments would be calculated, “We may intervene and take further actions where firms do not appear to be meeting our expectations and treating their customers fairly.”

Insurance Industry, Insurers and the Economy

Recession, Pandemic to Impact P/C Underwriting Results, New Report Shows

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The COVID-19 pandemic and the recession it started will result in no premium growth for 2020 and a deteriorated combined ratio for the property/casualty industry, according to the new report, Insurance Information Institute (Triple-I) / Milliman P/C Underwriting Projections: 2020-2022. 

Sean Kevelighan

Direct and net premium written will be virtually unchanged from 2019, while the industry combined ratio, a measure of underwriting profitability, is projected to rise to 102 at year-end, up from 99 last year, according to the report, a joint venture of the Insurance Information Institute and Milliman, a provider of actuarial and related products and services. The report, to be published quarterly, was unveiled on August 13 at an exclusive members only virtual webinar moderated by Triple-I CEO Sean Kevelighan.

James Lynch

“The pandemic and the recession it induced drove down exposures in personal auto and several commercial lines,” said James Lynch, FCAS, senior vice president and chief actuary with the Insurance Information Institute (Triple-I). “Overall premiums are projected to be flat,” said Lynch, adding, “a hard commercial lines market is driving rates higher, which offsets some of the deterioration in exposure.”

Jason Kurtz

“Though there is tremendous uncertainty as to size, the pandemic creates insurance losses that were not contemplated in either catastrophe or attritional pricing,” said Jason Kurtz, FCAS, a principal and consulting actuary at Milliman. “Not surprisingly, pandemic losses can cause underwriting results to deteriorate.”

The report noted that a number of legislative and regulatory proposals have the potential to affect pandemic exposures and losses.

A major hurricane or cumulatively severe wildfire season could also impact the combined ratio, the report noted. Right now, the report projects a typical year for catastrophe losses, though most hurricane prognosticators predict more storms than average.

Other Areas to Watch

Other areas to consider include the impact of the pandemic on workers compensation, particularly the shift in the burden of proof onto the employer for certain types of claimants (i.e. presumption) and the changing exposure from people working from home.  Workers compensation saw five consecutive years through 2019 where that line of business posted an underwriting gain; that could change with COVID-19. 

Economic trends also play a role. The report assumes that exposures roughly grow and shrink with the economy. If the recovery is slower or faster than projected, premium growth will be affected.

The report is an analysis by Triple-I and Milliman based on an actuarial model that relies on information from a number of publicly available sources as well as input from thought leaders and experts at both organizations. It predicts that premiums will grow 7 percent in 2021 and 6 percent in 2022 as the economy recovers, and the combined ratio will fall to 99 for both years as the industry prices for the effects of the pandemic and the higher rates charged this year earn out.

The complete webinar, available exclusively to Triple-I members, projected underwriting results for several lines of business: personal auto, homeowners, commercial auto, general liability, property, commercial multiperil and workers compensation.


Business Insurance, Business Risk, Legal Environment

Business Interruption vs. Event Cancellation: What’s the Big Difference?

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As I’ve written previously, the question of whether business interruption provisions in commercial property insurance apply to COVID-19-related losses has become a major topic of debate during this pandemic. Suits have been filed seeking to establish that policyholders are entitled to coverage for such losses – even when losses associated with infectious disease are specifically excluded in the policy language.

This debate has been muddied in some circles by people confusing business interruption coverage with event cancellation insurance.

Citing the fact that the National Collegiate Athletic Association (NCAA) had its claim paid when it cancelled its annual men’s basketball tournament, as did the All England Lawn Tennis Association when it canceled its Wimbledon event, some wonder why many other businesses’ claims are being rejected.

While superficially similar, these claims couldn’t be more different from the business interruption cases currently being litigated.

Business Interruption: Physical Damage Required

Property insurance covers physical loss or damage to an insured’s property. The business interruption provisions of commercial property policies typically require a direct relationship between a physical loss or damage and the resulting lost income. The Insurance Services Office (ISO) form for commercial property coverage – the basis of many policies – specifies that any covered loss due to “necessary suspension” of operations must be caused by “direct physical loss of or damage to property at premises which are described in the Declarations.”

This is a critical point, as most business losses related to COVID-19 are due to employees and customers remaining absent, supply chain disruptions, and other factors – not to physical damage.

 “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 when, say, a fire destroys the interior of a building or wind damages windows. The virus leaves no visible imprint. Even if remediation is needed – like cleaning mold from metal surfaces – insurers cite cases in which judges have ruled there’s no physical damage from mold if the mold can be cleaned off.

Add to this the fact that most policies exclude coverage for losses related to infectious diseases and it’s hard to imagine U.S. courts finding in favor of the plaintiffs – particularly when pandemic insurance existed well before COVID-19 and was largely ignored by business owners and risk managers.

Event Cancellation Insurance

COVID-19 has led to the cancellation of events from weddings to business conferences to the Tokyo Summer Olympics. Individuals and businesses buy event cancellation insurance against losses resulting from a cancellation due to circumstances beyond their control, including:

  • Weather or other natural events like hurricanes, tornadoes, and earthquakes, and
  • Human-caused events such as labor strikes and acts of terrorism.

If a policy is an “all-cause” or otherwise unlimited policy, it could cover cancellations due to COVID-19, particularly if purchased before 2020.

Wimbledon’s organizers were among the few who bought event cancellation insurance that specifically included coverage for losses related to “communicable disease” after the 2003 SARS outbreak. They paid about £25.5 million (US$33 million) in premiums since then and are set to receive around £114 million (US$142 million) for this year’s cancelled tournament, according to GlobalData.

GlobalData said the event still faces a net loss. The total Wimbledon revenue loss is estimated at around £250 million (US$328 million).

The NCAA had a policy for its “March Madness” tournament that had to be cancelled.  Its event cancellation policy covered just $270 million, even though the tournament generates more than $800 million a year. The organization reportedly was better prepared for a cancellation several years ago, when it built up savings of nearly $500 million to help mitigate the financial impact of a lost tournament.

“Then, in 2015, new leadership decided to spend more than $400 million of those savings without increasing the NCAA’s insurance coverage by following a questionable theory about the risk of saving that much money,” the Washington Post reports, citing former NCAA employees.

The availability of such coverage without exclusions for infectious disease may be limited or even more expensive in the wake of the current pandemic.

Business Insurance, Business Risk, Legal Environment, Regulation, Workers Compensation

Legislatures AdvanceCOVID-19-related Bills

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As states struggle to identify the best ways to reopen their economies, agencies, and schools from the coronavirus-related lockdown, legislatures have been moving forward legislation to protect them and the people they employ.

Virginia Approves Worker Health & Safety Standard

The Virginia Occupational Safety and Health (VOSH) – the state’s version of the federal Occupational Safety and Health Administration (OSHA) – will enforce a standard that mandates and, in some instances, exceeds guidance issued by the U.S. Centers for Disease Control and Prevention (CDC) and OSHA, PropertyCasualty360.com reports.

The standard protects employees who raise reasonable concerns about infection control to print, online, social, or other media. It covers most private employers in Virginia, as well as all state and local employees.

The standard also requires building and facility owners to report positive COVID-19 tests to employer tenants. It exempts private and public institutions of higher education with reopening plans certified by the State Council of Higher Education in Virginia (SCHEV) and public-school divisions that submit reopening plans to the Virginia Department of Education. No such exemptions are provided to private elementary and secondary schools.

In addition to CDC and OSHA guidelines, the standard requires employers to:

  • Provide flexible sick-leave policies, telework, and staggered shifts when feasible;
  • Provide handwashing stations and hand sanitizer when feasible;
  • Assess risk levels of employers and suppliers before entry;
  • Notify the Virginia Department of Health of positive COVID-19 tests;
  • Notify VOSH of three or more positive COVID-19 tests within a two-week period;
  • Assess hazard levels of all job tasks;
  • Provide COVID-19 training of all employees within 30 days (except for low-hazard places of employment);
  • Prepare infectious disease preparedness and response plans within 60 days;
  • Post or present agency-prepared COVID-19 information to all employees; and
  • Maintain air handling systems in accordance with manufacturers’ instructions and the American National Standards Institute (ANSI) and American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standards.

Special Legislative Session for Tennessee Liability Bill

Weeks after Tennessee’s two legislative chambers failed to come to an agreement on legislation surrounding civil liability for coronavirus, Gov. Bill Lee called the state’s General Assembly to return next week for a special session, The Tennessean reports.

Lee issued an order asking members of the legislature to return to Nashville at 4 p.m. on Aug. 10 to take up the matter, which would extend broad immunity to businesses, schools, and other entities against COVID-19-related lawsuits.

The General Assembly also is expected to take up two other bills it failed to pass before adjourning in June. One would expand medical professionals’ ability to offer telehealth services and encourage insurers to cover those costs. The other would increase penalties for protesters camping and engaging in vandalism at the Capitol. A group of protesters has remained across the street from the Capitol for more than 50 days, resulting in the arrest of some for trespassing and writing messages in chalk.

Nevada Senators Advance Liability Shield Measure

State senators in Nevada, by an overwhelming majority, advanced legislation that would extend COVID-19 liability protections to businesses, nonprofits, schools, and governmental agencies and outlining several measures intended to protect hospitality workers, The Las Vegas Sun reports.

The legislation would extend COVID-19 liability protections to many entities that have “substantially complied with controlling health standards.” Provisions of the bill would sunset either upon the termination of the current state of emergency or in July 2023.

The measure wouldn’t extend to most private health care providers.

“Unease with the bill’s focus on the tourism and gaming industry crossed party lines,” the Sun writes. “Sen. Marcia Washington, D-North Las Vegas, said she was concerned why the bill singled out hospitality workers: ‘I’m here to represent, as far as I’m concerned, everybody, all the workers in the state of Nevada,’ Washington said.”

Marie Neisess, president of the Clark County Education Association, said the bill did nothing to help teachers going back into the classroom this year.

“Even with the best safety measures in place, educators and students will still be at risk,” Neisses said. Putting a bill in place that protects the employer rather than the employee is unacceptable.”

The bill now advances to the Senate floor for final action as lawmakers continue to meet in special session.

“Rebuttable Presumption” for Essential Workers Goes to N.J. Governor

New Jersey may become the next state to enact a law presuming that essential workers who acquire COVID-19 did so on the job, Business Insurance reports.

Lawmakers in the New Jersey Assembly and Senate on Thursday passed S.B. 2380 with a 42-27 vote in the Assembly and a 27-12 vote in the Senate. The bill, introduced in early May, would create a rebuttable presumption for essential workers seeking workers compensation for acquiring COVID-19 on the job during a declared state of emergency.

The bill identifies essential employees as those whose duties are considered essential during an emergency response and recovery operation; public or private sector employees whose duties are essential to the public’s health, safety, and welfare; emergency responders and workers at health-care facilities and those performing jobs that support a health-care facility, such as laundry, research, and hospital food service.

The bill moves to Gov. Phil Murphy’s desk. If signed into law, the legislation would take effect immediately and be retroactive to March 9. According to Business Insurance, a spokeswoman for Gov. Murphy declined to comment on whether he intended to sign the legislation.

Disaster Preparedness, Disaster Resilience

Isaias Expected to ApproachFlorida This Weekend

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Hurricane Isaias is expected to strengthen somewhat, to a strong Category 1 hurricane, as it crosses over the Bahamas Friday and Saturday. The National Hurricane Center (NHC) now forecasts Isaias will come extremely close to the east coast of Florida later this weekend. 

According to the National Weather Service (NWS), the strongest winds in Florida will be felt from Pompano Beach to Palm Bay, where there’s potential for winds from 58 mph to 73 mph. Miami-Dade and most of Broward are predicted to see winds from 39 mph to 57 mph.

The NHC recently posted hurricane watches from north of Deerfield Beach to the Volusia-Brevard County line and forecasts two to four inches of rainfall from south-central to southeastern Florida, with potential totals of six inches. There is also the potential for some storm surge, with exact levels dependent on the future track and intensity of Isaias.

Residents are strongly encouraged to prepare for Isaias and other storms during this above-average hurricane season – particularly with the additional challenge of COVID-19.

Broward County Sheriff Gregory Tony said South Floridians should “start to examine what other opportunities or options they may have to be out of South Florida.”

Florida has recently experienced a surge in COVID-19 cases. In preparation for the storm, the Florida Department of Emergency Management has closed all state-run COVID-19 testing sites.

“The more that we can do as individuals and focus on the things we can do to reduce the burden on government will be extremely helpful as the mayor, the county administrator are tackling different new challenges and trying to be innovative to the point where we’re not shutting down government completely, but at the same time, we’re not unnecessarily allowing for hazards and exposures to this virus,” Tony said.

Wind-caused property damage is covered under standard homeowners, renters, and business insurance policies. Renters’ insurance covers a renter’s possessions while the landlord insures the structure.

Property damage to a home, a renter’s possessions, and a business – resulting from a flood – is generally covered under FEMA National Flood Insurance Program (NFIP) policies, if the homeowner, renter, or business has purchased one. Several private insurers also offer flood insurance.

Private-passenger vehicles damaged or destroyed by either wind or flooding are covered under the optional comprehensive portion of an auto insurance policy. Nearly 80 percent of U.S. drivers choose to purchase comprehensive coverage.

Disaster Preparedness, Disaster Resilience

Isaias Meets COVID-19: South Floridians Advised to Consider Evacuation

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South Floridians should “start to examine what other opportunities or options they may have to be out of South Florida,” Broward County Sheriff Gregory Tony said in a virtual press conference as a broad area of low pressure looked increasingly likely to turn into Tropical Storm Isaias.

Tropical storm-force gusts could arrive in Florida as early as Friday night, but Saturday is much more likely, according to the National Weather Service (NWS) Miami.  

Tony said the biggest hurdle officials anticipate during the 2020 hurricane season is the ability to effectively maintain social distance while taking in large numbers of people at county storm shelters. Florida has recently experienced a surge in COVID-19 cases.

“The more that we can do as individuals and focus on the things we can do to reduce the burden on government will be extremely helpful as the mayor, the county administrator are tackling different new challenges and trying to be innovative to the point where we’re not shutting down government completely, but at the same time, we’re not unnecessarily allowing for hazards and exposures to this virus,” Tony said.

In preparation for the storm, the Florida Department of Emergency Management has said it will close all state-run COVID-19 testing sites at the end of business day today.

The storm knocked out power to more than 300,000 clients across Puerto Rico, according to the island’s Electric Power Authority. Minor damage was reported elsewhere in the island, where tens of thousands of people still use tarps as roofs over homes damaged by Hurricane Maria in September 2017.

Business Insurance, Insurance Industry

Chubb CEO says business interruption policies are a good value and work as they should

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Evan Greenberg

In a July 29 earnings call Evan Greenberg, the CEO of Chubb, addressed the lawsuits filed by many businesses over business income (interruption) coverage during the COVID-19 pandemic. He stressed that even though business interruption (BI) policies do not cover a pandemic, they are a good value and work as intended.

“Standard BI policies, which are an addendum to a fire policy, require direct physical loss or damage to the property, for example, a fire or flood damages the property and prevents the business from operating while repairs are being made.  COVID-19 does not cause physical loss or damage to a property, despite the trial bar’s efforts to influence some government officials in the wording of their civil public shutdown orders,” he said.

Greenberg reiterated the uninsurable nature of pandemics and the necessity for the federal government to take the lead in mitigating pandemic risks. To properly service all policyholders, Greenberg said, the insurance industry must not be distracted by attacks from the legal community.

The comments appear in their entirety below.  

Remarks from Evan Greenberg, Chubb Second Quarter Earnings Call, July 29, 2020

I am going to say a few words about the business interruption issue that I know is on the minds of many.  As you know, the insurance industry is under attack by the trial bar over business interruption claims.  They represent many businesses which purchased BI coverage that does not provide cover for pandemic, and these customers are understandably disappointed and upset.  Plaintiff attorneys are attempting to torture or reverse engineer insurance contract language to conjure up business interruption coverage that for the most part simply doesn’t exist. 

Coverage for a pandemic was never contemplated in standard business interruption policies, and therefore no premiums were ever charged for that risk.  In fact, state insurance regulators, who approve the policies, have been clear that this risk is not covered and that the industry could not cover the massive open-ended tail risk of a global pandemic because it threatens the industry’s solvency.  Without the federal government playing a major role to cover the tail risk, pandemics are simply uninsurable on a broad basis.

Standard BI policies, which are an addendum to a fire policy, require direct physical loss or damage to the property, for example, a fire or flood damages the property and prevents the business from operating while repairs are being made.  COVID-19 does not cause physical loss or damage to a property, despite the trial bar’s efforts to influence some government officials in the wording of their civil public shutdown orders. 

Though it doesn’t cover pandemic, standard BI coverage provides good value for the money.  We estimate the industry pays out about 70 cents in insurance claims for every business interruption protection dollar collected, with most of the remaining amount paid in commissions, premium taxes and other expenses.   For Chubb, in addition to our normal losses this year, we will pay BI claims for policies that specifically covered certain pandemic-related shutdowns such as those for the entertainment industry.

We care deeply about properly supporting and servicing all of our policyholders, and I have particular sympathy for the millions of businesses that have suffered terribly during the pandemic-forced economic shutdowns.  But it would be wrong – in fact, catastrophic and irresponsible – to pay the claims of those who didn’t have coverage, and in fact didn’t pay premiums for the coverage, by using funds that have been properly reserved for the legitimate claims of the vast majority of our P&C policyholders who number over 100 million globally. 

To provide some context, in 2019, Chubb paid $24 billion on approximately four million property and casualty claims.  Again, to pay billions of dollars in uncovered claims by raiding the reserves or capital needed to pay claims on other kinds of policies, such as auto and home, commercial insurance exposures, or respond to natural catastrophes such as hurricanes and wildfires, would be irresponsible to the vast majority of our policyholders and to our shareholders.

Beyond the business interruption challenges of the current COVID-19 crisis, the insurance industry has an important role to play in society and in the economy, and that includes fully participating in the development of a prospective future pandemic business interruption solution should crises arise.  Earlier this month, Chubb released its Pandemic Business Interruption Program designed to mitigate the economic disruption and losses in the event of a future pandemic.

Our framework is not the first plan to be introduced. But the public-private partnership framework we developed has important differences from the other leading proposals. By sharing our ideas and approach, we hope to spark and influence a productive debate on a solution that will work for businesses of all sizes, taxpayers, our industry and the economy more broadly.

First and foremost, I believe the industry can and should take pandemic risk along with the government.  This is a peril that can be covered to a greater degree than we do today as long as the tail exposure is covered by the government.  It’s our job to figure out how to do that.  We can do more than simply play an administrative role or we belittle ourselves and we’re less relevant than we can or should be. 

The framework we announced has attributes that we believe will make for a successful program.  It accounts for the different needs of small, medium and, to a modest degree, large businesses. Premiums for small business will be affordable and they will be paid quickly. Larger companies would pay a fair and risk-adjusted price to both the government and insurers for pandemic cover in a program built on free-market principles.  The government gets paid for the use of its balance sheet – it’s not a handout to larger companies.

Our framework has incentives for broad participation by the industry. And by committing insurance industry capital and providing opportunity for increased risk-sharing over time as direct and secondary markets develop, the pandemic burden shouldered by the government will ultimately be lessened to a degree.

This is an important issue for our nation.  We look forward to contributing to the dialogue as policymakers work to refine the most effective solution.