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06.05.20

NP Connects: Conversation highlights for June 4, 2020

BY , , Morgan C. Nighan

NP Connects brings together leaders from a variety of backgrounds to share real-time perspectives on the coronavirus (COVID-19) pandemic.

On June 4, 2020, moderators Christopher Keefe and Philip Taub were joined by Morgan Nighan, Amy Stern, FTI Consulting; Joe Peiser, WillisTowersWatson; and Chris Nicolopoulos, New Hampshire Department of Insurance.

The Paycheck Protection Flexibility Act was passed unanimously by the U.S. Senate and awaits the President's signature. Among the significant changes made to the PPP, this act will extend the time period from 8 weeks to 24 weeks over which a borrower must spend the funds, lowers the 75% salary expense to 60%, though there is an issue with language as to partial forgiveness, and extends the period during which an employer needs to restore employee headcount until year end. There still is approximately $100 billion available left in PPP funds.

Most insurance companies have rejected COVID-related closure claims as a covered peril in business interruption insurance policies. The market excludes pandemics because the risk posed by a simultaneous global event cannot be diversified or shared. However, some policies did include pandemics because it was negotiated specifically.

Words matter within an insurance policy. It is worth the time to have your broker or underwriter clarify the words in your policy and shop your risk. Black swan events occur and your insurance should protect your P&L. Document your business revenues, assets, and projections in order to better negotiate premiums with insurance underwriters. Look to include midterm reviews in order to have your premiums flex with your business performance. Evaluate your portfolio of risks and insurance in order to evaluate where to spend or save your next dollar of premium. Cybersecurity coverage is the fastest growing need for businesses, and the market is expanding.

Premiums started to rise in early 2019 and significant premium increases are expected in 2020 as a result of increasing risks, increased claims, and declining investment returns.

State regulators have been asked to implement business interruption coverage retroactively. Many states have declined as it would jeopardize the financial health of the insurance market to cover claims for which no premiums were collected.

New Hampshire has approved 94% of the rate reduction requests submitted by carriers active in the auto and health insurance markets within 24 hours. These companies’ requests are the result of favorable claims experience following the decreased amount of travel and elective health procedures undertaken by their clients.

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Christopher P. Keefe

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Philip B. Taub

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Morgan C. Nighan

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