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How Is COVID-19 Changing the P&C Insurance Industry?

Toby Graham /

Employment, savings, retail, live sports, sanity, waistlines—COVID-19 has destroyed many things Americans hold dear. But despite how long it feels like we’ve been living through this, we’re still in the relatively early stages of the pandemic. We still don’t know how or when this will all shake out, or what the world on the other side will look like. Every consequence of COVID-19 causes multiple reverberations of its own, and a complete picture of the changes may take months or years to emerge.

Consider the property and casualty insurance industry, for instance. How will massive losses of jobs and revenue play out in policies, pricing, and claims? What kind of legal challenges will providers and employers face?

A recent article by the Insurance Information Institute seeks to shed some light on these concerns and offer potential hints about the future. The article mentions that “significant changes” in policy language are likely, and predicts that total claims for losses will hit somewhere in the “manageable” range of “$50 billion to $70 billion.”

The latter two sections are what caught my attention, however, because they deal with the messy intersection of employee health and employer liability.

First, there’s the potential “negative impact” of “legal efforts in several U.S. states to expand workers’ compensation coverage to allow employees to claim for COVID-19.”

I.I.I. Senior Research Analyst Jeff Dunsavage writes:

“The crisis has resulted in many employees now working from home, but a significant part of the workforce still needs to be present and public facing, and this is the group new state laws aim to support. For these workers, some states are looking to shift the burden to the insurer to prove that an employee contracting COVID-19 did not do so while on the job.”

‘This shift in the burden of proof could lead to significant additional losses to a segment already under pressure and result in increased reserve estimates and higher combined ratios,’ A.M. Best said.

Given that assumptions used in pricing and actual loss emergence diverge significantly, these legislative changes will result in an increase in loss estimates and could affect earnings.”

Meanwhile, some businesses are trying to avoid liability by “requiring customers and workers to sign forms saying they won’t sue if they catch COVID-19”:

“Businesses fear they could be the target of litigation, even if they adhere to safety precautions from the Centers for Disease Control and Prevention and state health officials. But workers’ rights groups say the forms force employees to sign away their rights should they get sick.

So far, at least six states—Utah, North Carolina, Louisiana, Oklahoma, Arkansas and Alabama—have such limits through legislation or executive orders, and others are considering them. Business groups such as the U.S. Chamber of Commerce are lobbying for national liability protections.”

Read “Gauging Pandemic’s Impact on Insurers.”

Whatever happens next—and whoever’s legally at fault for it—KPA is here to help you and your clients avoid claims, keep workers safe and healthy, and stay out of trouble.

Visit KPA’s COVID-19 Resource Center for free guides, presentations, insights, training courses, and more.

KPA’s value-added services can empower your clients to proactively address workplace risk, reduce incidents, and save costs. Learn more.

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