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How Is the Insurance Market Place Reacting to COVID-19 and Our Current Economy?

Coronavirus Update

As we move into fall, our battle with COVID-19 continues. August brought Greene County an increase in new cases. Our seven-day rolling average increased from 35 cases per day in July to 88 cases per day throughout August, culminating in 143 reported cases on August 27.

The largest number of cases are attributed to people ages 20-29 with the second largest age group being ages 10-19. Of the positive cases last week, 58% were from 18-22 years old. In Polk county, Bolivar Public Schools changed course and closed their high school after beginning in-person classes, moving into a more virtual environment. The data indicates two likely scenarios: these age groups are more likely to engage in enhanced risk activities and many are returning to schools and other institutional settings. As you likely know, we’ve also encountered additional cases in our jail and some long-term care facilities.

Working parents with school age children, increasing cases, and quarantining have created a challenging environment for both businesses and employees. In addition, government programs such as the Families First Coronavirus Response Act (FFCRA) has added additional complexity. Whether it’s employees who have kids at home part- or full-time (virtual classes), kids or adults who have been infected or exposed, or special requests for accommodations based on health conditions – every business is being forced to develop strategies to deal with these inevitable situations.

We’re often asked “how is the insurance market place reacting to COVID-19 and our current economy?”. Like most things, the answer is more nuanced than just COVID; however, COVID has added another layer of uncertainty to an already volatile world. Businesses like certainty and we’re going through some turbulence – creating some volatility. Here’s an overview of what we’ve experienced recently.

Initially, due to governmental shutdowns and stay-at-home orders, some insurance companies offered a reduction in premiums, primarily on autos for reduced driving. This was a relatively short-lived situation.

Loss of Business Income or Business Interruption insurance has been a significant topic of discussion. This policy is designed to cover income losses from a direct physical loss to property. A loss due to fire or wind would be two common examples of a direct physical loss to property that “triggers” loss of income coverage. Over 1,000 lawsuits have been filed with five cases being dismissed, where courts have sided with insurers citing that a virus does not meet the coverage definition of direct physical damage. Only one case has survived a motion to dismiss; that just begins the legal proceedings that are certain to last for several years.

Another coverage taking a beating is property insurance. Already reeling from wildfires and windstorms, 2020 has brought a hyperactive hurricane season. Most recently, Hurricane Laura levied an estimated $4-$8 million in damage to Louisiana alone with its nearly 150 mph winds. Unfortunately, the historical peak of the Atlantic hurricane season hasn’t even arrived yet, with four systems in various stages of development at the time of this writing. The result of an already volatile market includes demands for wind/hail deductibles and increasing rates. These factors, coupled with rising construction costs has created a difficult property insurance market.

2020 has brought many challenges and created opportunities, too. Businesses have “updated” their approaches to increase flexibility and remote work for staff. Downsizing and furloughs have changed the labor market – talented people are available and looking for companies with updated strategies and great cultures. Financing is available and rates are at all-time lows. Employee Benefit Plans are now truly being appreciated and desired by employees. All of these changing dynamics create opportunity for companies who effectively meet challenges and recognize opportunities.

Now, more than ever, it’s important to have great advisors to navigate this unusual time – whether you’re facing questions or concerns over COVID, property insurance coverages, employee benefits or human resources, we’re uniquely positioned to help. We are fully staffed with trained professionals. Our offices in Branson, Springfield and Bolivar are open. We’ve pivoted to serve our clients and communities more effectively than ever. We’re ready, able, and willing to help.

Stay safe,

Richard Ollis
RICHARD OLLIS CHIEF EXECUTIVE OFFICER Ollis/Akers/Arney Insurance & Business Advisors | 417-881-8333
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