Advisen FPN

Advisen Front Page News - Wednesday, March 18, 2020

'Such uncharted waters' - agents and brokers aim to meet client needs amid evolving situation


'Such uncharted waters' - agents and brokers aim to meet client needs amid evolving situation

By Erin Ayers, Advisen

For the nation’s insurance agents and brokers, the coronavirus pandemic has unfolded with a mix of “business as usual,” telecommuting challenges, and a deluge of coverage questions from customers.

Amid the global emergency, insurance professionals say that the show must go on when it comes to policy renewals and claims handling. Brokers say that their insurance partners are quoting and binding coverage and otherwise conducting business, even as the industry shifts into a work-from-home mode in most cases and events and meetings are cancelled.

“It’s a fluid situation and it’s changing by the hour,” Brian Wanat, chief broking officer of U.S. commercial risk solutions at Aon, told Advisen. He explained that insurers continue to re-underwrite their books, but he would expect many insureds to stay with their incumbent carriers.

Some insurers will allow a 30-day continuance for expiring policies, but not all, according to Dave Chmiel, SVP and national director of claims for Hub International.

“This really has evolved in a week to a place we thought it would never get to,” he said. “We’re all in this together and the carrier world sees that.”

In his 30 years in the business, Chmiel said only the 9/11 attacks can compare in terms of impact on commerce and coverage – and the coronavirus pandemic has been global in scale. And with every day that passes, it’s clear that the tragedy could deepen further.

“We’re in such uncharted waters,” he said. “The things that I was advising clients on a week ago have already changed.”

Insurance agencies and brokerages understand the position of the nation’s small businesses – many of them fall into that category, as well, according to Robert Rusbuldt, CEO of the Independent Insurance Agents & Brokers of America (The Big ‘I’). The association’s members are fielding a “deluge of questions” right now, he said, many of them from small businesses that have been shut down by state mandate.

When it comes to business interruption under property policies, the answer will most frequently be no, Rusbuldt said. The standard Insurance Services Office (ISO) policy requires business interruption to have a physical damage component – and pandemics/virus is usually excluded as a peril. Brokers are now having to sit down and have difficult conversations with clients. In addition to wondering whether business income loss will be covered, some shut-down entities have laid off employees and ask their agents whether they should continue to pay their workers compensation premiums or adjust payrolls, he said.

“Agents and brokers are risk managers so they will do everything they can to mitigate as much risk as possible,” Rusbuldt said. “Most businesses are underinsured, not overinsured. So, agents will recommend that they keep covering that risk.”

For Todd Jackson, owner of McGowan Insurance Group in Indianapolis, the “phone really started ringing” after the governor of Indiana directed all restaurants and bars to close to limit the spread of the virus.

“It’s been very surreal for us in the volume of questions,” he said.

Jackson’s agency, along with many insurance firms, also had to decide internally whether to keep its doors open to the public. McGowan Insurance opted to have employees work from home for now.

“We’re fortunate, given the circumstances, that this happened at a time when technology allows us to do that,” he said, noting that when he got into the insurance business, voicemail, laptops, and the internet were not an option for working from home.

“This wouldn’t have been possible. It allows us to do this and not sacrifice service,” Jackson said.

Hub’s Chmiel said that while briefly losing the face-to-face opportunities with customers and prospects, this situation also offers brokers a chance to showcase how they can manage their businesses and customer relations in a crisis.

For most, that means advocating for customers as they navigate pandemic-related coverage issues. Claims are already coming in, say brokers. And, given the predominant coverage situation, that means claims are already being denied, not only in the property space, but also on environmental policies and some entertainment and sports accounts.

“Unfortunately, we’re dealing with a type of loss that is incredibly unique and excluded in most cases,” Chmiel said. “Some people had the foresight to buy pandemic coverage, but we’re talking less than one percent.”

The coronavirus pandemic is unlikely to stem the tide of the hardening insurance market, according to brokers, especially with an expected wave of litigation over pandemic-related claims.

“It will probably, unfortunately, accelerate the hard market,” said Aon’s Wanat.

“It may vary from one line of business to another, but I’m not seeing coronavirus having an impact on underwriting attitudes,” said Jackson. “But I think it’s safe to say that [insurers] will see some pushback on coverage forms. That may have an impact.”

For brokers, the awareness exists that the nation’s economy and social structures may look different on the other side of this crisis. The hospitality, retail, and entertainment sectors have been hit hard by coronavirus, with bankruptcies likely to occur in the coming months and years.

“In all of this, whether it’s mortgage payments, insurance premiums, rent payments, car payment, the more financial pressure is going to be felt by a host of businesses, including the insurance industry,” said Rusbuldt.

He added, “If this ends in the near future, the pressure is off for a whole host of entities. If this goes on for the longer term, everybody in the U.S. is going to have to get creative.”

Editor Erin Ayers can be reached at

St. John's University