What companies seem to be learning from the disruption caused by the pandemic is there’s a really strong need to re-evaluate their insurance coverage.
“But that’s not the only piece of risk management,” says Jim Altman, Middle Market Pennsylvania Regional Executive, Huntington Bank. “It’s really about building a best-in-class risk profile that enables companies to mitigate risk in an efficient and effective way.”
Smart Business spoke with Altman about how companies should look at risk, and who they should talk to about it, to lessen their exposures during uncertain times.
Where did coverage gaps become most obvious when the pandemic hit the U.S. and how did that affect businesses?
There seemed to be a misunderstanding about what business interruption insurance would cover. This is a standard part of coverage that applies primarily to property and requires property damage, in most cases, to be triggered. With a pandemic, there was no real property damage, according to many of the insurance companies, though many claims are still being reviewed.
But there are other instances of risk being heightened as well. One of the most common is cyber exposure. Whenever there is some sort of crisis, there are likely to be bad actors. In the digital world, that could mean increases in phishing attempts that aim to get employees or customers to provide information that allows cybercriminals to hack into a company’s system or trigger a transfer of funds. That’s led to more conversations with businesses about that aspect of risk.
Directors and Officers and Employment Practices Insurance are there to mitigate liability at the executive level. This is applicable now as management is making decisions about remote work — who’s required to come into the office and who can work from home — and how those decisions can impact an individual.
How can businesses shore up their coverage and close gaps right now?
Businesses should have a conversation with their insurance broker about what their business is experiencing right now and the changes they’ve made. For example, they may have fewer employees or employees in different roles based on the business’s needs. That can create a different exposure and businesses should have a risk adviser or insurance broker who can ensure that they have the proper coverage. And then they can talk about how they expect their business to look going forward.
It’s never too early to have conversations with somebody who understands the risk marketplace. They can help companies identify steps that can be taken within those businesses to mitigate or lessen their risk.
What should businesses consider when it comes to employee benefits?
The impact that the pandemic has had on employee benefits programs, and especially on human resources policies and practices, is perhaps most profound as it directly hits at the heart of any business — the health and welfare and morale of their employees. New legislation, enacted following the forced shutdown of ‘non-essential’ businesses in many states, not only provided critically needed financial relief but introduced new regulatory guidelines on how employers must now manage their employee benefits programs and personnel issues affecting employees who have been laid off, furloughed, or who are working from home.
Beyond ‘benefits,’ employers must now consider developing a comprehensive human capital strategy that includes valuable health programs and protections that addresses the financial welfare of the workforce while delivering cost efficiency for the organization.
It’s important that companies are mindful of the pandemic and how the economic effect of it is impacting their business and their approach to management and employee benefits. Seek out advice from people who understand the unique risk exposures of a business so those can be mitigated. That could get a company through 2020 and set it up for success in 2021. That will require being proactive and having meaningful dialogue with somebody who’s willing to take the time to build a strategy that works for their business specifically.
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