A Fire. Wind. Theft. These are common perils we consider when creating a risk management plan. Because these occurrences happen every day. But who would have expected 2020 to introduce a global healthcare pandemic and economic shock, followed by serious civil unrest?
These aren’t new happenings, just rare ones that don’t usually enter the conversation. But all occurred in 2020 and taught a few lessons. Many businesses were forced to shut down and were surprised to learn that business income coverage only kicks in if there is physical damage to the building. Retail, restaurants, and other highly patronized establishments are now considering the effects of communicable disease in their risk mitigation strategies.
Meanwhile, social inflation is impacting premiums of some insurance, including Directors & Officers and Employment Practices Liability coverage. Social inflation refers to the rising cost of claims attributed to societal moods and the trends toward increased litigation, more class actions, and a broader definition of liability. These attitude shifts create greater sensitivity, lead to more scrutiny, and are triggering high-profile lawsuits with large jury awards when there is perceived social injustice. Businesses could face claims related to negligent business decisions, harassment, defamation, and discrimination of a protected class.
There were a few silver linings. When riots and looting broke out across the country, businesses that suffered losses were encouraged to know they were protected by their property coverage. Those that had to temporarily shut down due to COVID-19 were able to adjust their insurance costs, extend payment terms, and some even received premium credits. The industry is mobilizing to find alternative business income coverage in the absence of property damage.
One thing we all learned in 2020 was to expect the unexpected. A robust contingency plan isn’t a luxury – it’s critical. By planning for the future, we can move forward with the tools and protections to pivot and make decisions quickly. Most importantly, businesses should press the pause button and take stock of what risk management tools are in place today. Search for gaps and find the protection that can transfer the risk.
So, what does this mean from a business insurance perspective? Here are a few questions to ask yourself to ensure you get the coverage your business needs to survive and thrive:
What Did You Change?
Restaurants and bars shifted to take-out and delivery, and they evolved to feature outdoor seating. Businesses across the board adopted sanitization protocols to keep employees and customers safe. Some businesses completely altered their operating models. How did your business adapt during COVID-19? Exposures evolve as businesses change. Now is a crucial time to re-evaluate potential risks and address previous exposures that might impact your business in today’s world.
How Can You Save?
No business wants to furlough employees, close doors temporarily, or reduce volume. But when these operational circumstances occur, there are insurance considerations to address. Talk to your Client Advisor about your existing workers’ compensation plan and the business insurance you’re carrying today. Adjustments based on your post-pandemic business model could reduce your insurance expenses.
What Coverages Will Help?
As your policy nears renewal time, consult with an advisor to discuss existing coverage and exclusions. Is there a product that could help you if a pandemic happened in the future? Insurance industry professionals are evaluating how to provide affordable coverages for crises including pandemics and communicable disease risk. Consider what happened post-9/11 when insurers partnered with the federal government to design plans that cover acts of terrorism. Stay in touch with your insurance advisor so you can learn about the latest tools and products.
Be Sure.
Pandemics happen. Civil unrest rattles communities. Communicable disease risk is not just a possibility; it’s on the news every day. However, there are ways to thoughtfully plan for today and the future. Business insurance also evolves with the times. Let’s create a plan to protect your business so you can be nimble, confident, and ready for whatever the next days, weeks, and months bring.
