Author: John Head
It's been a year since our lives have been impacted by COVID-19 with safer-at-home, face coverings, travel restrictions and other mandates becoming the norm. In addition, we've experienced a seismic shift with remote work and the way the insurance industry as a whole operates, including on the wholesale side.
As a result of COVID, we needed to operate differently, travel less or not at all, and find ways to continue and foster our professional relationships. In this new landscape, I've found that we are communicating a lot more with our underwriters, agency clients and insureds.
More Time for Conversations
There are 86,400 seconds in a day – think about how much of this time you've gotten back now that you work from home (WFH). We no longer commute to our offices or get on a plane or in a car to travel to take care of business. This has added hours to our days and how we work. We are doing more work at times that are more convenient for us.
And, while I think we will eventually get back to having face-to-face meetings on some level, what we've learned during this time is we can communicate much more than we ever did before. It doesn't just have to be in person. Yes, this is a people-driven industry, based on relationships. This won't ever change, but we've found ways to keep and enhance these relationships remotely and, in the future, as a result we will travel but it will be more purposeful.
We're also having more meaningful discussions with our underwriters and clients as a result of today's difficult insurance marketplace. It's taking longer to work on renewals, but we're able to do this for our clients and remote work has facilitated this.
The COVID Effect on Insurance Lines
Throughout March, April and May 2020, we saw an influx of loss of income claims with businesses having to shut down due to the pandemic. Most of these claims are still up in the air, and it will take quite a while before the dust settles. Since then, we haven't seen as many COVID-related Business Interruption (BI) insurance claims.
On the casualty side, the courts for the most part have been closed, creating a bottleneck in claims settlements. As a result, I believe some people will want to settle more quickly, which is a positive thing. Once the courts do open, we will may go back to seeing the types of nuclear-verdicts that have characterized our litigious landscape.
The frequency of automobile accidents is down as there are fewer cars on the road because of COVID, but the severity of the accidents has gone up. People are driving faster on these open roads and engaging in unsafe behavior like distracted driving and driving under the influence. The National Highway Traffic Safety Administration (NHTSA) recently released a statement saying that "fewer Americans drove but those who did took more risks and had more fatal crashes." In total, 11,260 people died on U.S. roads in the third quarter of 2020, up from 9,953 in the same three-month period in 2019.
In terms of management liability, D&O claims will continue to come in with people looking at whether the pandemic could have been handled better by an organization.
The cyber market has changed dramatically since COVID due to remote work. Premiums were on an upward trajectory before COVID and will continue as bad actors leverage cybersecurity vulnerabilities inherent in remote work. You see more businesses purchasing cyber insurance, due to the amount of technology being utilized at home and the potential for losses.
Most insureds are being optimistic that they will be back in business. In the meantime, they are adjusting their insurance programs to reflect a drop/change in exposures and are paying less premium.
For example, depending on the location, restaurants no longer have patrons in their establishments, reducing their general liability and liquor liability exposures. Some are only offering take-out service, which is a completely different exposure and is reflected in their insurance. They may decide this is a better business model for them. Establishments are learning to do things differently – how to make things touchless, with technology and innovation emerging.
The Insurance Road Ahead
Insurance is very progressive, and I believe moving forward we will be addressing the types of claims we have seen with new policies and new endorsements and products. Business Interruption insurance will offer virus coverages via endorsement or by removing a policy's virus exclusion for an additional premium. We also may see sub-limits for pandemic-related coverage available on BI policies to provide some type of lifeline.
In terms of the retailer-wholesaler-carrier relationship, what is most clear for us at RPS is that COVID further exposed the flight to quality. You want a wholesaler who is your partner, is responsive and collaborates with you. Working with a wholesaler is much more about having a consultant and a partner, not just having access to capacity these days. Our passion for insurance continues.