Day 48 of Sheltering In Place

April 30, 2020
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Good Morning!!  We are 43 days into this crazy time and we continue to do our part to stop the spread of this pandemic.  We are fortunate to be able to work with our clients from the shelter of our homes and we are grateful for that!!

I want to talk a little about what our Commercial Insurance carriers are doing to help business owners during this difficult time.  As most business owners know, your policies were not designed to cover pandemics.  This may be frustrating but I would like to offer some details about the reason behind this policy language.

Many years ago when Sars and the Mers virus reared their ugly heads, insurance companies began to explore the possibility of providing coverage for pandemic activity.  When a new coverage is developed, there must be research to determine the right price to charge for that coverage.  This is done by actuaries (specialized mathematicians) modeling what the effects of a pandemic might be and whether there was a way to offer the coverage at a price that would not break the bank. The answer was no.  The price of such a product, would be unaffordable. 

You see the concept of insurance is designed to pool clients together to make premiums more affordable for the insured.  In that pool, it's expected that there will be some losses.  Because the insurance company has collected enough premium from the entire pool, it should have sufficient premium to cover some losses in that pool.  However, if the entire pool has a loss, then the premium collected would never be able to pay for all those losses. 

There are still some companies that are exploring the possibility of selling a pandemic policy, however, it leaves me wondering whether the policy will be affordable and whether the next pandemic might cause the insurance company to become insolvent.

Here are some things that commercial carriers are doing.  They are deferring payments.  They are amending sales and payroll to lower premiums.  They are adding coverage for deliveries by employees. They are delaying audits. They are delaying non-renewals. And finally, our claims professional are paying covered claims.  Remember, we still cover fire, windstorm, hail, theft, vandalism, water damage and may more losses that happen even at this time. 

Please contact our office if you have questions about how we can help you weather the storm.  We are here to help you.