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When the pandemic hit, the new risks associated with COVID-19 and resulting closures set off some changes for insurance. While event cancellation insurance changes popped up on everyone’s radar immediately, after a year of changes to the risk environment, others are coming to light.
“Insurance has always been an ever-evolving market because they are risk managers,” said Brian Haney, CAE, founder and vice president of the Haney Company, an insurance brokerage and advisory firm. “As risks continue to evolve, the insurance landscape is really good at evolving with it.”
So, how is the insurance market changing? I got in touch with Haney after seeing a post on ASAE’s Collaborate expressing concern that workers’ compensation insurance rates rose when employees began teleworking. Haney addressed workers’ comp and four other issues that should be on associations’ radar when it comes to the evolving insurance landscape.
Workers’ Compensation
Increases in workers’ comp for telecommuting isn’t something Haney is seeing uniformly, as this insurance is controlled by state insurance boards. “Each state is in its own realm,” Haney said. Because it’s a state-level issue, telecommuting pricing changes could be caused by state changes, the fact that the telecommuter lives in a different state, or changes in the classification of workers.
For example, since the officeworker classification tends to be the cheapest to insure, if telecommuters are being classified differently, it could affect rates. “We want associations to recognize now is really the time to make sure you are looking at the classifications and working with your workers’ comp carrier to get them correctly done,” Haney said.
Cyber Insurance
With more workers telecommuting, more cyber risks exist. Sensitive financial and membership data could be at risk if home networks or equipment aren’t secure. Haney recommends all associations consider a cyber insurance policy. They also should put internal policies in place to mitigate cyber risks.
“Create policies, procedures, and enforcement, and then control those things that can be uniformly controlled,” Haney said. “First, have a policy that everybody has to subscribe to that details their roles and responsibilities and practices in cyber hygiene. Number two, institute various information controls. These are similar to procedures for finances – like having two people required to sign checks over certain amounts. You can apply the same logic to staff who are handling data that would be considered sensitive.”
Homeowners Insurance
With more association professionals working from home, Haney said they should check their homeowners or renters’ insurance policies to see if they provide coverage for remote work (such as equipment damage coverage or liability resulting from work performed). “It is very common for there to be an exclusion for working from home,” Haney said. And while it’s a common exclusion, the policy owner can often get it removed by just asking.
“It’s real easy to fix,” Haney said. “I would say, overwhelmingly, it doesn’t cost anything to change. You can go to your insurance company and say, ‘Hey, address this, or remove this.’”
New Business Models
The pandemic didn’t just move people to full-time remote work; it also changed the way some associations did business. “A lot of associations have pivoted to making material changes to how they make money and who they partner with,” Haney said. “You want to ask: Are you doing things materially different that would necessitate you writing or protecting certain things from a risk standpoint?”
If you are doing things differently, don’t panic. Haney says it’s unlikely you have to buy a new policy. “Most people aren’t having to buy new coverage per se,” Haney said. “The overwhelming majority of them just had to make sure the policies accounted for things they were doing different.”
Virtual Event Cancellation Insurance
Since insurers are still learning the market on this, Haney expects it will take some time to figure out the best practices. “Some risks that are evolving are still unknown risks,” he said. “It will take the industry time to get it right because it is new. We, as practitioners, aren’t overly comfortable with that part of the market yet. We are not seeing standout policies that we would hang our hat on and say, ‘Yay, this is how you would address virtual event risks.’”
With all the changes that have happened during the pandemic, Haney says now is a great time to have an insurance review. It can typically be done in five business days and will help ensure coverage matches current needs. “The evaluation should empower you to say, ‘Here are the things we need to change,’” Haney said.
