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 direct impact that COVID-19 has had on employers, the pandemic has influenced many of the risk avenues your organization faces, causing some traditional exposures to shift. Knowing the how those exposures to risk have been changing can help your organization weather the pandemic and help prepare your organization for the next crisis.
COVID-19 has reduced the incident rate of certain types of EPL claims, while increasing the frequency of others. For instance, harassment claims have decreased, likely a reflection of the increased number of people
working from home. However, the informal setting of working from home could increase other types of harassment claims.
Insurance carriers are closely monitoring these trends to determine risk profiles and premiums. While it is still too early to tell the full extent of COVID-19's impact on the EPL insurance market, carriers anticipate several claims scenarios stemming from violations of the Families First Coronavirus Response Act (FFCRA), layoffs and furloughs, claims under the Americans with Disabilities Act (ADA) related to accommodations and/or medical confidentiality, violations of state-mandated work-from- home orders, and retaliation against employees for reporting unsafe
working conditions. Additional EPL risks could arise over time.
Historically, insurance carriers have denied workers’ compensation claims for workplace virus transmission, since most worksites do not have an increased likelihood of spreading a virus than the community in general. However, states have been making it easier for workers' compensation carriers to accept claims related to COVID-19.
Many states have issued executive orders or revised workers' compensation statutes to create a rebuttable presumption that contracting COVID-19
is work-related for designated “frontline” employees, such as healthcare workers and emergency responders. Depending on the state, this could include employees such as grocery store workers and teachers. Employers should take note of the definition of covered workers for the states in which they have employees.
With many offices restricting in-person activities, premise liability claims related to incidents like slips and falls are likely to decrease. However, general liability claims related to contracting COVID-19 on site are still possible—not only from customers and vendors, but also from employees. While workers’ compensation insurance may cover an employee who contracts COVID-19 in the workplace, general liability claims could arise from the employee transmitting the virus to an at-risk household member who gets seriously ill or dies. Additional liability could arise if the employee can point to evidence of gross negligence on part of the employer, such as intentionally ignoring warnings or standard safety protocols. Other general liability risks related to employment remain possible, such as an employee going out to pick up supplies to accommodate remote work and getting into an accident with a third party.
A loss coupled with the existence or threat of COVID-19 can dramatically impact the outcome of a claim and lengthen the time it takes to get back to business.
It is important to review your insurance policies and business preparedness plan periodically to ensure the coverage limits, terms and conditions are adequate, and to help your operations recover swiftly, if not fully in the event of a catastrophic incident, like a natural disaster or public health crisis.
While COVID-19 is a unique risk, it was not unforeseeable. Employers with a robust emergency response and business continuation plan in place were the best positioned to weather the business interruptions that COVID-19 has presented. Contact USI Insurance Services’ business insurance and risk management specialists to assess and mitigate your organization’s risk.
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