EPIC Risk Advisory Bulletin

Volume 1, Issue 25

In this issue, we take a focused look at:

  1. Insurance Products and Coverage Information
    • Effect of Q3 Losses on Property Renewals
    • Will Property Insurance Respond if Election-Related Protests Turn Violent?
    • Business Liability Immunity and Interruption Update
    • Presumptive Compensability Legislation
    • News of Note
  2. Human Resources and Employee Benefits
    • Silver Lining to Remote Working
    • How Workplace Benefits May Reflect Pandemic Realities
    • Paying for Coronavirus Cleaning Supplies and PPE
    • OSHA Publishes Coronavirus Quick Tip Videos
    • Insights from Across the Firm

The information presented here is intended to provide a high level overview of critical areas of concern for businesses around coronavirus. Consult your EPIC insurance broker for more in-depth guidance.

Insurance Products & Coverage

Effect of Third Quarter CAT Losses on Property Renewals

Arch Capital Group Ltd. said recently that 2020 third-quarter pretax catastrophe losses will range from $190 million to $210 million, including estimates of $10 million to $15 million for exposure to coronavirus-related claims, across its property and casualty insurance and reinsurance segments. While those figures will be net of reinsurance recoveries and reinstatement premiums, it echoes what other insurers including The Hanover Insurance Group and Axis Capital Holdings have said.

The catalysts behind these estimates is unsurprising; the historic wildfires burning across the west coast of the U.S. as well as the over active hurricane season may end up having a greater impact on Insurers’ results than will claims related to coronavirus.

EPIC’s research shows underwriters are capturing rate as they move pricing, terms and conditions closer to what their “technical underwriting” standards dictate.

Many carriers are cutting back significantly on capacity being offered at renewal, potentially creating program gaps. In fact, recent renewals at EPIC showed large shared and layered programs can enter the renewal process with significant $100 million holes to fill, which directly impacts renewal pricing. Another influencing factor is increased scrutiny on Civil Commotion coverages in reaction to the protests and rioting, wind, hail, flood and wildfire perils; many are seeing increased deductibles at a minimum.

For more on how these developments may impact your organization, contact your EPIC broker.

Will Property Insurance Respond if Election-Related Protests Turn Violent?

With a contentious election ahead, it is not unreasonable to ask how property insurance may respond if protests in business districts turn destructive and cause damage to insured properties. Some policyholders are wondering how their insurance will respond if the worst occurs.

Remembering the social unrest of the spring and summer, businesses are beginning to prepare for protests to turn violent this fall. Some business owners with property located in central business districts and urban shopping areas are monitoring protest routes to see if their properties could be placed in harm’s way during violent protests. Proactive measures being taken by some include boarding windows and doors, securing valuable items, and increasing security and surveillance activity to do what they can to hedge off potential looting and other destructive activity.

At particular risk are businesses that have sat largely idle or vacant over the past six to nine months. In those cases, businesses may not be fully covered for damages yet to be incurred by potential election-related protests. While riots, civil commotion and vandalism are commonly covered perils under commercial property policies, it’s not uncommon for vacant and/or idle properties to be excluded or offered only limited coverage under standard policies. Additionally, terminology used in specific policies can make a difference as to whether or not a claim is covered. For instance, if a policy covers looting but not political upheaval, and a claim is considered to fall under the latter term, policyholders could be denied coverage. Coverage is far from automatic.

All of these realities and risks are serving to further harden the property insurance market, which is suffering losses from the third quarter, which have made it one of the worst Catastrophe Loss quarters in history, second only to the third quarter of 2017.

Business owners concerned about potential damage to their properties should work now to put a security and risk mitigation plan in place. Emergency closure procedures and business continuity plans should be drafted or reviewed, and updated now. Keeping an active eye on social media for protest activity, should it occur, will help property owners take quick, proactive measures. It is also advised to identify a contractor to respond to any damage, and to remove any combustible materials from property sites.

Since coronavirus complexities could reduce property insurance coverage, it is also essential to discuss options and coverage with a broker now and address any outstanding risks. Business interruption coverage is critical to put in place, and language around civil authority, ingress/egress sublimits and waiting periods should be carefully reviewed. Connect with an EPIC broker today.

Business Liability Immunity and Interruption Update

While the coronavirus itself is new, business liability and interruption insurance lawsuits are not novel. A wave of lawsuits this spring revealed a fixed mindset about the virus and whether or not losses from it were covered under business interruption policies. Since courts, generally speaking, read and interpret policy language very narrowly, most of the lawsuits have been decided in favor of insurers. In these cases, since the virus and subsequent closures did not result in physical damage to covered properties, claims payouts were denied. A recent suit by restaurant owners in Georgia was denied by a judge on the grounds that the virus did not create actual physical damage to the covered properties.

In the past few months, litigators have taken more creative license in how they argue their cases in court. In Kansas City, plaintiffs argued that the virus had infected their properties in a literal sense, and thereby caused physical damage that warranted closure. A federal judge heard the argument and ruled in the plaintiffs’ favor, which could open the possibility for more rulings in business owners’ favor. In North Carolina, a state court judge ruled in favor of a group of 16 restaurants, deciding that the state’s order to close the restaurants constituted a covered physical loss under their business interruption policies.

Still, cases are largely being decided in favor of insurers. In one instance, after an insurance carrier denied a law firm’s claim for lost business income due to the pandemic, the firm sued the carrier and insurance producer, but the suit was dismissed. In a similar suit, the Houston Rodeo is suing its insurance company in an attempt to recoup some of the millions of dollars in losses it has suffered since the onset of the pandemic. The outcome of this suit is yet unknown.

Now, as wildfires and hurricanes create actual physical damage and loss to businesses shuttered by coronavirus, new questions are arising as to how much damage will be covered and whether or not business owners may be able to recoup losses from the virus through damage caused by catastrophes. First party property and business interruption policies will pay for the repair or replacement of buildings damaged by covered perils, as well as business income lost during the time it takes complete repairs. Some policies include an Extended Period of Indemnity feature that triggers payout for diminished revenue until sales return to a normal state. The question comes in what is considered normal, since even after repairs are complete, the pandemic may still be negatively impacting sales. While a business may be able to reopen after the disaster is resolved, it may still remain closed due to the coronavirus pandemic, complicating potential payouts under policies that might otherwise be cut and dry.

Presumptive Compensability Legislation

An ongoing issue affecting workers’ compensation is presumptive compensability legislation from states. At least 18 states have proposed workers’ compensation bills related to coronavirus, including an expansion of coverage for either frontline, essential or all workers. Some states have issued executive orders, bulletins, emergency rules and directives on workers’ compensation coverage for certain workers. It is a dynamic situation that warrants monitoring by employers.

Companies, represented by the Chamber of Commerce, have been aggressively lobbying Congress for immunity from liability lawsuits related to coronavirus. Lawsuits have come in many forms. In McDonald’s Corp, et. al. v. Austin Mutual Insurance Co., workers and family members filed suit against McDonald’s for public nuisance and negligence because of their decision to remain open during the pandemic. The plaintiffs contend they have been exposed to the virus and incurred an increased likelihood of contraction because of the fast food chain location’s decision.

In the absence of federal legislation, states have forged ahead with liability and compensability measures of their own. In Michigan, a bill guaranteeing immunity for health care workers providing COVID-19 care from civil action was passed 29-8, and a second bill aims to protect businesses from liability for people who contract the virus on their premises, except in negligent circumstances. In Georgia, Gov. Kemp signed Senate Bill 359 into law to protect businesses from similar liability.

In New Jersey, lawmakers introduced legislation that would make a coronavirus infection during a public health emergency compensable for workers in warehouses or distribution centers. In Minnesota, H.B. 6 and S.B. 16 would make coronavirus an occupational disease arising out of and in the course of employment for teaching, school administrators and other staff. Finally, in Michigan, Gov. Whitmer issued an emergency rule reinstating a rebuttable presumption for first responders and health care workers there who contract coronavirus.

In every instance, businesses are not protected from infections caused by gross negligence. Employers should continue to abide by all OSHA, DOL and CDC guidelines and do all in their power to reasonably keep employees and customers safe from transmission and spread of the virus.

As this is a fluid situation, remaining current on what is happening in your particular state is critical. Ogletree Deakins has assembled a searchable table to track which states have implemented or proposed amendments to state workers’ compensation statutes. The table also addresses workers’ compensation benefits for health care workers and first responders. Access the table

For more information, contact an EPIC team member.

News of Note

The passage of another two weeks has brought forth more developments across the insurance world. Here is a rundown of recent news stories of interest.

HR & Employee Benefits Insights

There’s a Silver Lining to Remote Working

The pandemic has shown that work may never return to what it was like before 2020. Large corporations and professional firms across America are finding that productivity has not been negatively impacted by moving to a fully remote work environment. While much of the discussion around the pandemic is bleak, the workplace changes may reveal a few silver linings for workers in 2021.

Remote work is an efficient and desirable option for many workers, and will remain so even after the need for it abates. Office culture will likely adapt to a new reality where many professional workers will only be required to work in the office part-time, with the balance of work performed in a remote setting. Employees have long seen working from home as a way to bring better work-life balance into their lives. And now, many who wanted a work-at-home situation have received it thanks to the pandemic. As childcare and schooling activities return to normal, it will provide an opportunity for many employees to achieve better balance by continuing to work, at least part time, from home.

Prior to the pandemic, many companies began to pull back on remote working opportunities, fearing they would lead to decreased productivity. Just 31 percent of workers in the U.S. said they had worked from home before the pandemic. By early April, that figure doubled. Now, many large and small businesses alike are encouraging employees to continue working remotely through the end of the year and in some cases, well into 2021. It is hard to see a complete reversal once coronavirus is no longer a factor.

Another silver lining to the pandemic could be decreased traffic and better air quality around the world. Now that employers have become comfortable with employees’ ability to work effectively from home, it seems very possible that companies will begin rotating 30 or 40 percent of their workforce in remote settings to reduce overall congestion in densely populated cities.

The final silver lining could come in renewed economic innovation arising out of the pandemic. BlackRock CEO Larry Fink believes the working conditions and market climates created by the pandemic will spur economic dynamism for a variety of industries across world economies. Telehealth, gaming, entertainment, virtual events and conferencing are just a few examples of industries already being disrupted at a heightened pace by the pandemic.

While there certainly are drawbacks to the positives mentioned, it is beneficial to think about the positive possibilities the pandemic could enable in the months and years ahead.

How Workplace Benefits May Reflect Pandemic Realities

A surprising discovery was identified in the 2020-2021 Aflac WorkForces Report – fifty percent of employees polled note that the pandemic has caused them to spend more time making benefits selections this year. This is good, because chances are high that benefit selections will look different in 2021.

As we all know, stress levels are elevated for many workers. Mental health, in particular, is a need employers may want to get ahead of with their benefit offerings this year. More than 25 percent of employers polled by Aflac indicated mental health issues have affected their businesses this year. On the other side of the issue, 63 percent of employees said they anticipate receiving at least one expanded benefit, including supplemental insurance or telemedicine to help them feel secure at the workplace.

Virtual medicine may very well provide employers with a beneficial way to expand access to mental health care to employees and provide that expanded benefit they expect. Offering stress management and relaxation programs as part of a wellness program could be another way employers can meet the needs of workers from a benefit perspective.

Another area of heightened concern for many employees is childcare. Some employers are responding with discounts or subsidies to help offset the cost of childcare centers and tutoring, while others have chosen to contribute to parents’ dependent care flexible spending accounts, which can be used to offset the cost of childcare for children under age 13.

For more insight into managing your upcoming benefits election period, contact an EPIC team member.

Paying for Coronavirus Cleaning Supplies and PPE

As more employees may return to working in person in the coming months, companies are focused on ensuring a safe and germ-free work environment. Preparations include purchasing PPE, hand sanitizer and sanitizing wipes, among other cleaning products. Some companies are even buying robust air purifying systems to remove potential germs from the air. The costs for these purchases can add up quickly.

Employers can likely use the wellness funds provided by their health insurance carriers to pay for these expenses. Health insurers often provide their employer clients with an annual wellness fund, and this year, many health insurance carriers are allowing employers to use funds that have been set aside for wellness programs to purchase COVID-19 cleaning and sanitizing supplies. Employers with leftover wellness funds should reach out to their carriers to see if those funds can be allocated to purchase PPE and other health and safety measures designed to protect employees from contracting or spreading the coronavirus.

If you have questions related to this matter, reach out to Suzannah Gill at .

OSHA Publishes Coronavirus Quick Tip Videos

The Department of Labor (DOL) has produced a series of 27 COVID-19 Quick Tip videos, in both Spanish and English languages, for employers to use to help keep workers safe during the coronavirus pandemic. Topics of short, 20-second videos include:

  • Ways to Increase Social Distancing at Work
  • Use the Right Tools to Clean Your Workplace
  • Are You Eligible for Paid Leave?
  • Putting on and Taking Off a Mask
  • The Americans with Disabilities Act

These short, informative videos can be found in the DOL’s YouTube playlist here: COVID-19 Quick Tips

Insights From Across the Firm

EPIC thought leaders have written numerous articles on matters relating to coronavirus, all of which are available on EPIC’s website. The most recent articles include:


Our understanding of coronavirus and its impact around the world continues to evolve at a rapid pace. This newsletter briefly touches on issues that businesses may want to consider as they approach their response to novel coronavirus. More topics will be considered in future issues as our understanding of the virus and its impact continues to evolve. Please reach out to your EPIC broker for more information.

For all of EPIC’s coronavirus coverage, visit epicbrokers.com/coronavirus 

Disclaimer: This has been provided as an informational resource for EPIC clients and business partners. It is intended to provide general guidance on potential exposures and is not intended to provide medical advice or address medical concerns or specific risk circumstances. Due to the dynamic nature of infectious diseases, EPIC cannot be held liable for the guidance provided. We strongly encourage readers to seek additional safety, medical and epidemiological information from credible sources such as the Centers for Disease Control and Prevention and the World Health Organization. Regarding insurance coverage questions, whether coverage applies or a policy will respond to any risk or circumstance is subject to the specific terms and conditions of the policies and contracts at issue and underwriter determinations. 

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