COVID-19 Issues

As the world grapples with the impact of the COVID-19 pandemic, virtually no one has been left unaffected. As we all work to adjust to this “new normal,” virtually every profession, trade, and industry is struggling with unprecedented challenges. Our industry is not immune to such challenges, and is constantly working to adapt to the changing political and economic landscape.

The Target Markets Program Administrators Association (TMPAA) recently held a town hall webinar to discuss some of the most pressing issues for the insurance industry. A summary of panelists’ experiences, information, and advice follows.

Disparate and Changing Regulations

A common challenge confronting insurers is finding a way to keep up state regulations attempting to control the spread of COVID-19. Such regulations vary by state and are being updated regularly, making compliance more difficult than usual.

Heidi Strommen, Distinguished Programs’ Restaurant Program Manager, pointed out that this is especially challenging for businesses with multiple locations: “The more states you do business in, the more regulations you’re trying to monitor…being up to date today doesn’t mean you’ll be up to date tomorrow.”

In order to stay on top of the latest regulations, Strommen recommends plugging into carrier partner resources–especially for insurers without an in-house compliance department.

Strommen also recommends insurers work with carrier partners to develop a cancellation and grace period strategy that meets guidelines and mandates for the majority of states in which they do business. Terms of payments should also align with this strategy. Insurers should then implement this strategy voluntarily, even in states with less stringent requirements.

Minimizing Collection Exposures

Insurers present at the panel expressed concerns about minimizing collection exposures. In response, David Jordan, president and CEO of Breckenridge Insurance Group, suggested that insurers review their agreements with carrier partners, particularly those addressing account current and collections, as well as fiduciary responsibility for earned premiums. This way, insurers can develop a full understanding of their obligations before taking action.

Jordan also stressed the importance of maintaining an ongoing dialogue with internal collections staff, third-party collection firms, and the carrier, all of whom are likely to face an increased workload as a result of the pandemic.

Legislative Intervention

As Chris Pesce, TMPAA president and National Director of One80 Intermediaries, pointed out, legislators in several states are working on bills that may create coverage for COVID-19-related business income losses.

Some states are working to pass laws that would require insurers to cover business income losses related to COVID-19, regardless of policy wording. Others, such as Massachusetts, want carriers to pay business income losses due to COVID-19, then seek state reimbursement for any losses paid. Others still are crafting language to increase coverage for businesses. For example, states may deem a virus in the workplace to be property damage, creating coverage under most policies.

The issue with these legislative proposals is that they seek to change the terms of private insurance contracts, shifting financial responsibility for the COVID-19 outbreak onto insurers. If passed, these bills will create obligations for insurers that were not accounted for throughout the underwriting process, and for which insurers have never received premiums.

In the midst of the COVID-19 pandemic, insurers are working diligently to adapt. Each day presents new challenges alongside a constantly evolving political and economic landscape. Though nothing is for certain in this “new normal,” industry experts, such as the Target Markets panelists, are coming together to develop creative solutions to shared challenges.

A full presentation of the Target Markets Town Hall is available at www.targetmkts.com.