How to Assess Your Insurance Coverage Amid the COVID-19 Crisis

Haney May 4, 2020 By: Brian Haney, CAE

While the COVID-19 crisis has forced associations to evaluate their event cancellation insurance policies, the virus’ impact goes beyond meetings. That’s why associations need to examine their insurance related to all aspects of business operations.

As association leaders develop and implement their response efforts to the COVID-19 pandemic, it is important that they also examine all of their current insurable risks and policies. While event cancellation may seem like the most obvious threat, there are several other areas of impact when it comes to insurance related to business operations. Here is a look at what to consider:

Workers’ compensation and employer’s liability. Every jurisdiction has specific laws pertaining to workers’ compensation and communicable disease claims. The general rule for most industries is that the matter would likely not be deemed compensable if the employee was considered at no greater risk than the general public. However, if it is believed an employee has COVID-19 and can prove the condition was contracted at their place of employment or through associated travel, then any subsequent lost time, including the period of absence required during the quarantine period, could trigger coverage. If an employee contracts COVID-19 through work and claims that the infection is a result of the employer’s negligence, the employee could sue under the workers’ compensation policy.

Cyber risk. Coronavirus has triggered the largest work-from-home mobilization in history. While this certainly tests the nimbleness of associations as they unfold their business continuity plans, it also creates a heightened need to become more cyber vigilant. Associations should notify all employees to exercise extreme caution to avoid phishing or other email-based threats. In addition, advise employees against accessing sensitive data via unsecure networks or devices and remind them of your cyber policies. Associations with an agile workforce should be well-equipped to maintain network integrity using sophisticated virtual private networks (VPNs) and multifactor authentication.

Directors and officers and employment practices liability. As associations reevaluate their operational decisions and structure, staff adjustments may be needed for the association to survive. Employees who are reassigned, furloughed, or laid off may involve lawyers and the courts in response. The breadth of your D&O and EPL coverage needs to be examined in order to protect the organization and its senior staff.

Properly designed insurance coverage is really the intersection of two critical elements of protection. The first and possibly more essential factor is an organization’s own risk assessment. The second is creating policies and procedures. Only by seeing your operational and human capital risks and developing the right policies and procedures can you properly transfer certain exposures to an insurance company through a policy. Use this crisis as an opportunity to examine and refine your operational policies and procedures to better address current and future risks.

If this pandemic revealed you did not have certain coverages that you probably should have, then address those holes moving forward. Now is the best time for a comprehensive insurance audit. Be sure that you work with an insurance professional that understands the association industry and create a roadmap for organizational risk management moving forward.

When reviewing insurance, also examine the following related employee benefits:

Paid sick leave entitlements. With expanded FMLA coverage considerations, now is the ideal time to examine all holiday and leave benefits for employees.

Short-term disability. Consider how your organization will handle this, either through insurance or refined paid leave and sick leave.

Employee assistance programs. Identify EAPs that have local assistance and service offerings in case of a future pandemic situation.

Retirement plans. Examine the plan’s adoption agreement specific to plan loans and hardships.

Health savings accounts. Consider adding HSAs to your medical plans, as the need for employees to save specifically for medical expenses will likely only grow.

In addition to considering employee benefits, with most medical carriers covering all costs related to the detection and treatment of coronavirus, associations may face higher insurance premiums at renewal. Be prepared for potential increased costs for medical and disability policies, two areas where health claims may be highest.

For property and casualty policies, there may be a mix of industry outcomes. It is likely that the insurance industry will respond with increased premium costs for policies with the highest levels of claims, such as event cancellation. To mitigate some of the premium risk, carriers may also place exclusions on COVID-19 (as well as any mutations thereof) and possibly expand other exclusions that could affect how future pandemic events would be covered. Aon’s dedicated coronavirus page offers insights into the potential property and casualty impact.

When exploring new coverage or renewing existing policies, pay careful attention to the policy language and understand how your policies are designed to pay future claims relating to communicable disease or pandemics. Fortune favors those who prepare. 

Brian Haney, CAE

Brian Haney, CLTC, CFBS, CFS, CIS, LACP, CAE, is vice president at the Haney Company in Silver Spring, Maryland.