Tips to mitigate the impact of the coronavirus pandemic on insurable risk
With all of the questions and unknowns surrounding COVID-19, companies everywhere are struggling to balance being a good corporate citizen with grim business projections. For risk managers focusing on future claims, the impact will be the strongest in three areas – workers’ compensation, general liability, and business interruption coverage. Here’s what you’re likely to see – and how you can begin to mitigate the fallout.
As more and more people are tested and diagnosed with COVID-19, many of those will say that they caught the virus at work, sparking a rise in workers’ comp claims. The issue will be in determining whether the employee did in fact catch the virus at work. Between contact with family members, minor interactions at supermarkets and gas stations, grabbing the mail, picking up takeout meals, and more, how can you definitively trace the point of infection back to the workplace? In most cases, the answer is you can’t. So how will you respond? Some considerations:
- Do you have a plan in place to determine how these claims will be handled by your adjusters? Will they be denied outright? Will they be investigated? Are your adjusters prepared to ask the right questions to gather the necessary data? Having these internal discussions now will help you efficiently deal with these claims when they start coming in.
- If claims are denied, what message are you sending employees? This question is an important one in these times of uncertainty and high anxiety. Having the proper conversations with human resources to create a communication plan can help employees navigate their benefits to access support and pay for medical costs in the event the workers’ comp claim is denied.
- What is covered under your workers’ compensation insurance? Work with your broker and insurer to determine what is fully covered under your workers’ compensation claims, as well as specific regulations for the state in which the employee resides. Pay particular attention to the language used regarding pandemics and infectious diseases since that is new territory for most companies.
Many organizations have physical locations that service the general population. As more people test positive for COVID-19, more will likely allege that they contracted the coronavirus while on your property and interacting with your employees. Similar to workers’ compensation, general liability claims related to COVID-19 will be next to impossible to prove – but that’s not likely to stop an influx of claims. So what can be done? Some considerations:
- What are your policies and procedures? Have internal discussions now to determine exactly how you want to handle these types of claims. And bring in your adjusters and/or TPA so everyone is adhering to the same rules.
- What are your general liability limits? Review the language in your general liability policies, specifically regarding bodily injury and medical payments related to disease and pandemics. Understanding in advance what you could be liable for will be helpful when and if these claims have to be adjudicated.
Business Interruption Coverage
With government shutdowns, quarantines, travel restrictions, shelter in place, and other directives, most organizations will have cause to file business interruption claims because of coronavirus. Do you know what your insurance covers? Some considerations:
- How is business interruption defined in your policy? What is covered – and is coverage triggered by a pandemic or its subsequent effects? Have a conversation with your broker and insurer to make sure you have what you need to file these claims properly when the time comes.
- Do you have all policy information at hand? If you have a RMIS, you probably already have values and exposures data required for business interruption claims. If you don’t currently have the required data, take steps now to collect and store it in one place. Anything you can do ahead of time to gather data and set up reports will speed up the eventual submission and processing of your claim.
The full impact of the coronavirus pandemic on business, healthcare systems, economics, and public institutions will not be realized for years. But with care and planning, you’ll be better prepared to weather the storm of uncertainty around COVID-19 and the resulting claims.
For more information on the coronavirus pandemic from a risk and compliance perspective, see Could There Be a Silver Lining from the Coronavirus Outbreak? and the Riskonnect coronavirus tracker.