SHIFTING RISK

What we're seeing

Understanding the threats your organization may face can help you determine the best strategies to prepare for and respond to those risks. While a global pandemic is unusual, an event like COVID-19 was not entirely unforeseen. In addition to the impact that COVID-19 has had on employers, it has influenced many of the risk avenues your organization faces, causing some traditional exposures to shift. Knowing how those exposures to risk have changed can help your organization weather the pandemic and prepare for the next crisis.

Additional Resources

• Commercial Property & Casualty Market Outlook
• COVID-19-related management liability: Challenges of a hardening market

BUSINESS INTERRUPTIONS

What we're seeing

While many employers were able to recover from the first wave of shutdowns, subsequent shutdowns have been no less devastating, and in the face of such uncertainties, it may be worth revisiting whether relief can be found through your insurance policies.

Additional Resources

• Is your business ready for the next flood of management liability claims?
• Civil unrest and business insurance

CATASTROPHIC LOSS

What we're seeing

Since 1980, the U.S. has experienced 258 weather disasters causing at least $1 billion in damage, 46% occurring in the last decade, according to data from the National Oceanic and Atmospheric Administration (NOAA). 2020 was a particularly active year, with the worst wildfire season on record and an historic hurricane season. With estimated losses between $5.8 billion and $15.8 billion from hurricane damage alone, repercussions may be felt throughout the entire insurance market, reflected as higher premiums for insureds not directly affected by these catastrophic events.

Additional Resources

• Hurricane Insurance?

PHARMACY

What we're seeing

Drug pricing in the U.S. is complex and impacted by various factors. The high cost of prescription drugs makes pharmacy one of the fastest-growing health plan expenses for employers to manage. Here we examine some of the top drivers of prescription drug costs and ways employers can manage pharmacy plan expenses.

Additional Resources

• Pharmacy spend: Attaining Goldilocks
• What is the fuss about prescription drug rebates?

HEALTH BENEFITS

What we're seeing

Health insurance premiums continued an upward trend in 2020, increasing 22% over the past five years and 55% over the last decade, according to the Kaiser Family Foundation’s 2020 annual Employer Health Benefits survey. Even if premiums stay as they are, COVID-19 and the resulting economic downturn have placed financial strain on many employers. Less concerned about presenting a traditional benefits package, employers have shifted focus from “recruit and retain” to “survive.” As a result, many are now considering extreme cost-saving measures, such as individual coverage health reimbursement arrangements (ICHRAs) and reference-based pricing to control healthcare spend.

Additional Resources

• Non-traditional benefits for non-traditional times
• 5 best practices for communicating big benefits changes
• Individual Coverage HRA: New developments and guidance

FIDUCIARY LIABILITY

What we're seeing

Employers who sponsor a 401(k) retirement plan are at increasing risk of “excessive fee” lawsuits, with Bloomberg Law reporting 3 times as many class action lawsuits over 401(k) plan fees in the first 3 quarters of 2020 than all of 2019 combined. Under the Employee Retirement Income Security Act (ERISA), employer plan sponsors can be held personally liable as a fiduciary for a breach of duty claim, even if the employer has delegated plan management to a third-party recordkeeper or administrator.

Additional Resources

• What we talk about when we talk about fees
• Fiduciary slugfest! 401(K) fees square off vs. proprietary funds — A case for why fees may come out on top, and how you can mitigate your fiduciary risk
• The veiled risk: A look at cybersecurity, liability and your 401(k) plan

RANSOMWARE

What we're seeing

The sudden shift to remote work due to COVID-19 gave cybercriminals new opportunities, accelerating the frequency and severity of cyber attacks to historical heights. Cyber criminals also continue to evolve in their tactics and targets, attacking both organizations rich with confidential information and vendors farther up the supply chain. Insurance companies have responded with increased scrutiny and higher insurance premiums.

Additional Resources

• FBI warns healthcare firms of targeted ransomware attacks
• As ransomware threats increase, take action to protect your organization
• October 2020 Threat Intelligence highlights

BEHAVIORAL HEALTH

What we're seeing

Even before the pandemic, employers were beginning to recognize the importance of supporting employee behavioral health. In 2019, the American Psychiatric Association estimated $44 billion in lost productivity every year due to behavioral health concerns, such as depression and anxiety. While employee behavioral health has been a growing concern for several years, COVID-19 has created new and unique challenges impacting a greater number of individuals and compounding pre-existing health concerns.

Additional Resources

• Understanding ADA and FMLA compliance obligations related to employee mental health
• Responding to mental health needs during unsettled times
• Protect employee mental health and your experience mod
• Addressing mental health in the workplace
• eBook: The new remote workforce: Maintaining employee well-being during a pandemic
• Support workplace mental health to improve employee satisfaction and productivity while reducing costs

DELIVERY OF CARE

What we're seeing

According to a September 2020 Centers for Disease Control and Prevention (CDC) Morbidity and Mortality Weekly Report (MMWR), an estimated 41% of adults in the U.S. avoided medical care during the pandemic, including 32% who avoided routine care. Because of this disruption, many individuals have been going without preventive care and chronic condition management, both of which are crucial for managing health and healthcare costs. To help slow this escalating trend, employers can encourage the continued use of healthcare services by expanding delivery options for employees.

Additional Resources

• Beyond health insurance costs: Understanding and addressing population health risks related to COVID-19
• Evolving healthcare consumption due to COVID-19
• Is your employee benefits strategy aligned with the long-term goals of your organization?

RETIREMENT READINESS

What we're seeing

Studies show participant decisions are heavily influenced by the default choices the plan sponsor presents. In the absence of clear directives, plan participants typically take the path of least resistance, preferring to retain default choices such as contribution rate and investment options. Employers looking to increase participation and employee contributions can take advantage of behavioral finance theory and implement automatic features.

Additional Resources

• Plan Sponsors Can Do More to Improve Employee Retirement Readiness
• Focused on Fees How Retirement Plan Sponsors Can Rein in Excessive Fees
• The veiled risk: A look at cybersecurity, liability and your 401(k) plan

NUCLEAR VERDICTS

What we're seeing

Awards in personal injury lawsuits have been increasing dramatically in number and size in the commercial auto/fleet industry, along with a corresponding increase in insurance costs. Often referred to as “nuclear verdicts,” awards in these cases tend to be significantly higher than expected compared to the cost of the damages. The number of cases with nuclear verdicts over $1 million has increased 335% since 2012, according to the American Transportation Research Institute (ATRI). This has caused a significant hardening in the insurance market for commercial auto and fleet operators.

Additional Resources

• Ensure fleet safety to reduce risks behind the wheel

REMOTE WORK

What we're seeing

Once widespread vaccinations, relaxed stay at home orders, or other measures make it possible for employers to safely bring employees back to the workplace, employees may have reservations about returning to an in-person setting or may not be ready to give up the flexibility remote work affords. While employers may not have to continue to allow remote work full-time for the majority of their workforce, they will want to be ready to address employee concerns, potentially offer flexible solutions, and ensure compliance.

Additional Resources

• What’s the trick to effectively managing your remote workforce?
• Making the transition to virtual open enrollment
• Risks and benefits of bring-your-own-device practices for the evolving workforce
• Workplace flexibility will keep your organization running during and after COVID-19
• 5 steps to stronger cybersecurity for remote employees