As businesses start returning to work, the question lingers, what will happen to business insurance? Business Interruption Insurance has made headlines throughout the shutdown for excluding pandemics from coverage. The reason for this is twofold, Business Interruption Insurance is typically tied to property and casualty, of which the losses from the government shutdowns did not impact. And many policies specifically have a pandemic exclusion. Therefore, the need for a new type of coverage now exists and it will most likely be tied to biosecurity processes that businesses will be required to put into place. Read on to explore the current state of business insurance, how biosecurity can help, and why business will need to implement a suite of new proactive measures to protect their organizations from future disease outbreaks.
Previously, pandemic-related insurance was practically non-existent, except for ‘PathogenRX 2018’, which was not in high demand. And because Business Interruption Insurance is both connected to property and casualty and the major insurers put pandemic exclusions into place thanks to Ebola and Swine Flu, businesses were left out to dry when COVID-19 hit—organizations were not covered for the losses they would incur due to the effects of the both the disease and the consequent government shutdowns.
However, no one is writing policies for the current pandemic, just as it’s nearly impossible to get flood insurance during a hurricane. Also, insurance companies will only take on so much of one type of risk, and the demand is so high for pandemic-related insurance it will likely become ‘sold out’ from the major insurers when it does become available. This is the reasoning behind the PRIA Bill introduced recently in Congress
The PRIA Bill would create a program in which participating insurers would offer pandemic-related business interruption and event cancellation coverage, and they would be reimbursed by a federal backstop for some of their losses. Having a government backed solution will allow more insurers to come into the market to meet the demand.
In the long run, what this means for businesses is that they need to implement a suite of new proactive measures to protect their organizations from disease outbreaks as well as put policies in place to maintain business continuity more seamlessly than they had when COVID-19 hit.
Many businesses found themselves in a position where they could not track exposure to to the virus, so if someone tested positive, they had to shut down their entire facility. However, with a biosecurity plan in place, management can see where the infected person was in the facility and whom else they may have exposed. For example, if an infected person worked in the sales department on the 2nd floor, they can just isolate the 2nd floor only and in some cases only the sales department. Being able to see who is exposed to an infected person allows businesses to isolate individual areas as needed, which is the first step in mitigating the losses caused by a virus.
Biosecurity processes that allow organizations to strategically screen, monitor and trace disease infections throughout their facilities are starting to become mission critical to business operation. Besides making the workplace safer for everyone, they will also make insurance more affordable and less risky.
Just like when you install a fire alarm, insurers are likely to give you a discount because you have taken a proactive step to minimize the risk of losses from an insurable event. Biosecurity is essentially a combination of an alarm system (screening/monitoring) and a sprinkler system (contract tracing). The early detection and fast mitigation that is made possible with BioSecurity is along the same lines as defending against other conventional threats like fire, floods, and earthquakes. Visit our How it Works page to see exactly how our tools can help you protect your business.
The Job Safety Act of 1970 gave rise to the Occupational Safety and Health Administration (OSHA), which requires employers to protect their employees from known and common threats. A biosecurity solution like ReturnSafe will likely become mandated as public health hazards that are linked to employee safety. COVID-19 has brought those threats to the forefront. We see this as an opportunity to collaborate with insurance companies to write in disease mitigation and protections to their new health policies.
This is what will drive the price of pandemic-related insurance down and allow major insurers to meet the demand for businesses impacted by not only COVID-19, but also those concerned with the lingering effects of the disease as well as future bio-threats.
The personal threat that COVID-19 puts upon employees, is already covered by OSHA policies because it is what is known as a “lethal moment.” As the situation develops, it is unlikely that companies can be held accountable for employees contracting the virus at work, but if they haven’t done enough to prevent an outbreak at their facility, it is likely they will be held accountable for the oversights. The questions management teams need to be asking themselves right now are:
No matter what industry you are in, our screening, monitoring, and tracing tools give our clients the ability to provide a protective mechanism for their employees, customers, and partners. For more information on how we can help your team put a biosecurity process in place and to prepare for the new world of business insurance that we are all entering, request a demo today. Learn how it works.