This is a letter delivered to our commercial clients on Friday, April 3rd:
First, I would like you to know that everyone here at Southern Insurance Advisors is thinking about you every day. Our staff was already 100% remote prior to the outbreak so we are fully operational and here to help. If you did not read our prior message about COVID-19, please take a moment to read it here: https://www.southia.com/news/2020/03/does-business-insurance-cover-coronavirus. There’s also important information about remote/field workers and Workers Compensation here: https://www.southia.com/news/2020/03/work-comp-virtual-or-field-employees.
Over the past week or so we’ve received some additional information and guidance from the insurance commissioner and our insurance carriers. Here are a few important things to be aware of:
- Most carriers are offering adjustments to your billing. These adjustments may be a 30 day pause on amounts due or some other variation of cash flow relief. Many are also waiving late fees. If you’re interested in restructuring your payments, the best thing to do is to contact your insurance company’s billing department. We do not have the authority to alter your billing here in the agency. You can find your insurance company’s billing contact information on your billing statement, on our website here https://www.southia.com/insurance-companies, or by contacting us at service [at] southia [dot] com.
- We can make changes to your estimated payroll or revenue. Many policies have premiums based on Gross Revenue or Payroll. These policies are typically audited each year at the end of the policy year so you will only pay premium based on your actual results. If your operations have stopped or if your revenue has declined by 50% or more, we would be happy to review your policies for potential changes now. If you have experienced a milder slowdown, we would suggest waiting until May 1st to see how the government stimulus impacts you and to get a better measurement on your own company’s results before making changes.
- Workers Compensation - policy premiums are based on payroll. We can discuss your current payroll projections and compare them to your revised payroll projections to determine if we should revise them now or wait for the annual audit. Changing them now will reduce the premium across your remaining payments or result in a refund of your policy is currently paid in full. Many carriers also offer Work Comp payments based on your actual payroll each month called Pay-As-You-Go. You can manually report your payroll each month or we can link your policy to many payroll providers for automated reporting (not ADP and Paychex, they block us from doing so).
- Other Liability Policies (General Liability, Professional Liability, etc.) – These premiums are frequently based on revenue. We can discuss your current revenue projections and compare them to your revised revenue projections to determine if we should revise them now or wait for the annual audit. Changing them now will reduce the premium across your remaining payments or result in a refund of your policy is currently paid in full.
- We can make changes to your coverage. We try to be good stewards of your insurance dollars in good times and in bad by providing you with the coverage that is needed for your business, no more, no less. There are likely few opportunities for alterations to your coverage that wouldn’t negatively impact your exposure to risk. That said, here are some examples of changes we have made for other clients:
- Vehicles – A client with a fleet was forced to place multiple vehicles in storage. We removed collision coverage from some of the vehicles since they weren’t being driven.
- Property - A client with multiple warehouses is closing one location due to a slowdown in operations. We reduced this location down to minimum coverage levels until it is reopened. Another client with a warehouse operation is experiencing lower inventory levels as a result of decreased demand. We reduced the amount of property coverage until inventory levels come back.
- Claims - Most insurance policies include a number of exclusions for the loss of revenue from a viral outbreak including the requirement for physical damage to property as a coverage trigger, virus exclusions, and pollutant/contaminant exclusions. After reviewing many policies, we haven’t seen language pointing toward coverage for lost revenue yet. That said, we are not authorized to make coverage determinations so the only way to know if coverage applies or not is to file a claim with your insurance company. Also, the exclusions are likely to be challenged in court and there could be government intervention through the state legislatures (insurance is regulated by the states so Federal intervention is unlikely). While any claim is likely to get declined now, filing a claim with your insurance company now would reserve your right to receive benefits later if the exclusions were to be overturned by the courts or by legislation. It is probably a prudent step to file a claim now, but I want to be clear about expectations. The claim is likely to be declined and the legislature and courts are not likely to cause the financial collapse of the insurance industry by overriding the exclusions on the policy. It’s a Hail Mary, but desperate times call for desperate measures. If you would like to file a claim for your lost revenue, you can find contact information for your insurance company here: https://www.southia.com/insurance-companies. If you need your policy number or other information to file your claim, please contact us at service [at] southia [dot] com.
- Operate Cautiously – Many General Liability policies include an exclusion for Bodily Injury to Others caused by a Virus, Contaminant, or Pollutant. If you operate your business and your facility, product, or employee spreads the virus to a customer, you probably have no liability insurance protection for your customer’s injuries. They would, of course, have to prove they contracted the virus from you for you to be liable. Please be careful if you are in a business delivering tangible products or direct services to customers. Follow the CDC guidelines closely.
On a recent conference call with an insurance company executive, he relayed a story to the participants. To paraphrase: When we had the H1N1 virus scare, the White House commissioned a report on the potential economic impact of a pandemic. The report essentially forecasted our current reality. That report made it to ISO which is the regulatory body that creates insurance policy language. They reviewed it and compared the economic impact to the financial reserves of the insurance industry and noted that a pandemic would cause a catastrophic failure of the insurance industry. The next year, ISO issued revised policy language mandating the attachment of Virus and Bacteria exclusions on all ISO based policy forms. Since almost the entire industry uses ISO policy language or language based on ISO language, almost every policy in the country has the same or similar exclusionary language. ISO recognized that the risk of a pandemic was uninsurable. Other similar catastrophic risks such as Terrorism and Flood have historically been underwritten by the only party with deep enough reserves to insure them, the Federal Government.
Next week, several pieces of the recent Federal Stimulus package, the CARES Act will become available to small business owners. A lot of this money is available and while labeled as loans gets forgiven so it is largely free money. You should research the options to support your business here: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. The US Chamber of Commerce also has great resources for workplace safety and other valuable information here: https://www.uschamber.com/coronavirus.
Our thoughts are with every one of you during this difficult time. We’ve talked to many of you already and would be happy to talk to anyone who needs help. Please call us at 770-977-7045 or email us at service [at] southia [dot] com for assistance. We are having a lot of conversations with a lot of clients at once so please bear with us if there is a slight delay in our response.
Southern Insurance Advisors
1103 Macy Dr
Roswell, GA 30076
For service such as policy changes, billing questions, certificate requests, etc, please email service [at] southia [dot] com or see the Contact Tab on Our Website for 24 Hour Customer Service Hotlines. www.southia.com