3rd Quarter Insurance Risk Newsletter 2020

Interview with Diane Thurston, Human Resources Operations Manager at Next Adventure


Next Adventure has been a Brown & Brown Northwest employee benefits customer for almost two years. 


Next Adventure has faced significant challenges during COVID-19 with terminations and rehires. What has been your guiding star in navigating those constant changes as a team?

That ‘this too shall pass’ but also putting the care and well-being of our employees at the forefront.  Communication was key.  It was important for us to regularly check-in with our employees to make sure they and their loved ones were okay; that they were aware of all the resources available to them to get through this pandemic; and for Next Adventure to be able to help as much as possible.  


How has the Brown & Brown Northwest supported you during this time?

B&B has been phenomenal in their support of Next Adventure; especially when navigating benefits with layoffs and then as we’ve brought employees back to work.  B&B has been very responsive – and patient – as we’ve learned together how to navigate through unchartered territory during a global pandemic.  In the early months of COVID, they held informational webinars as well as sent brochures addressing COVID updates and healthcare changes made to help our employees through this extraordinary time.  


As you compare BBNW to other service providers, how would you rate them as a business partner?

Very high.  The team we work with at B&B are professional, responsive, and always helpful.

What’s New in the Market: Insuring Vacant Properties

Vacancies are a common occurrence in the world of commercial real estate. Commercial tenants come and go with the rise and fall of the economy, and many commercial properties can fall into disarray once they become unoccupied.


Fire is the greatest concern for insurance carriers when it comes to vacant properties. Every effort should be made by the property owner to maintain fire protection systems in working order and eliminate other potential fire hazards within the property. Frozen water lines can also be a significant cause of loss when building heat is not maintained. Additionally, vacant properties are more susceptible to vandalism than an occupied property. These buildings are not constantly attended and so providing the proper preventative measures to combat these exposures is critical. The Travelers Indemnity Co recommends a series of loss prevention tips for vacant buildings, which can be found here.


Currently, many commercial property owners are seeing an increase in vacancy at their properties due to the economic impacts of COVID-19 and local government stay-at-home orders. But it’s not just those properties with tenants that have permanently shut down operations, there is a whole other set of commercial properties that have become devoid of customary operations as their usual occupants are on work-from-home orders.


This is where the (no) vacancy provision in the property owner’s insurance policy can, unknowingly, come into effect. Almost every commercial property policy has some variation of a vacancy or unoccupancy provision. In the standard ISO property policy form, the vacancy provision is found in the policy’s “Loss Conditions” section. In other policy forms, it may be found in the “Limitations” or “Other Conditions” sections. While most commercial property policies only use the term “vacant,” some policies distinguish between the terms “vacant” and “unoccupied.” In these cases, the occupant’s intention to return is often the difference between the two. 


But what do these vacancy provisions say? In most commercial property policies, if the insured building is “vacant” for more than 60 days before a loss occurs, there is no coverage if the loss is caused by: 1) vandalism, 2) sprinkler leakage, 3) building glass breakage, 4) water damage, and/or 5) theft or attempted theft. For all other covered losses, the insurer will reduce the insured’s recovery under the policy by 15% or more if the vacancy provision applies. Here is a copy of the definition of “vacancy” from the ISO form…

Definition of “vacancy” from the ISO form.

While ambiguities in insurance policies, especially in exclusionary provisions, are to be resolved in favor of coverage, it is best to try to avoid being in a situation after a loss has occurred where you’re fighting about whether a property was vacant or unoccupied and, if so, whether there is coverage for a particular loss. Instead, it is better to be proactive on this issue.


Brown & Brown Northwest has reached out to our carrier partners to determine how each is currently interpreting and/or enforcing their vacancy clauses as it relates to governmental stay-at-home orders.  Many carriers have advised that they would not be evoking this clause should there be a loss at a location that was currently unoccupied due to government ordered closure. However, others have said they would be reviewing the issue on a case-by-case basis and still others have advised that they are enforcing their vacancy clauses.


As you can see, understanding the vacancy clause wording of your commercial insurance policy, as well as confirming your insurance carrier’s current stance on what is considered a “vacant” property as it relates to COVID-19 business restrictions, can be critical to the financial well-being of a property owner should a loss occur.


If your business has been shut down for an extended period of time, or you are a commercial property owner whose tenants are shut down, we advise that you check your property policy for a no vacancy or unoccupancy provision and reach out to your Brown & Brown Northwest contacts to discuss.

Employee sanitation during COVD.Risk Management: COVID-19 Liability

While the COVID-19 pandemic has forced many organizations to close their doors for an extended period, states across the country have implemented reopening measures, allowing various establishments to resume operations. However, as organizations open their doors once again, there are numerous health and safety concerns to consider thereby reducing your liability exposures. 


The following guidance will assist in keeping your employees, volunteers and customers safe as you resume in-person services and ensure a successful reopening. Keep in mind that this guidance is general – depending on the location of your business, you may need to account for additional state and local requirements or restrictions.


Employee and Volunteer Health and Safety

Before you can allow your customers back into your establishment, it’s crucial to implement organizational adjustments and procedures to ensure the health and safety of your employees and volunteers. 


Consider these measures:

    • Utilize routine meetings and emails to communicate with employees and volunteers about the steps being taken to prevent COVID-19 exposure within your organization.
    • Provide an adequate supply of paper towels, soap and hand sanitizer to allow employees and volunteers to maintain proper hand hygiene. 
    • Offer tissues to ensure employees and volunteers follow proper cough and sneeze etiquette, as well as no-touch trash bins for tissue disposal.
    • Educate employees and volunteers on the common symptoms of COVID-19, such as fever, cough and shortness of breath. Tell them to stay home if they have any symptoms.
    • Conduct a wellness check on employees and volunteers each day to ensure they are healthy and safe to enter the establishment. If they answer “yes” to either of these questions, send them home:
      • Have you or any person you’ve been in close contact with been diagnosed with COVID-19 in the past 14 days?
      • Have you experienced any cold- or flu-like symptoms (i.e., fever, chills, cough, sore throat, headache, stuffy or runny nose, vomiting or diarrhea) in the past 72 hours?
    • Provide employees and volunteers with adequate personal protective equipment (PPE). This includes masks or cloth face coverings, gloves and—if necessary—face shields.
    • Require employees and volunteers to wash their hands after entering the establishment, after touching their mask or face covering, after using the restroom and after leaving the establishment.
    • Train employees and volunteers on these topics:
      • How to safely put on, use, remove and store PPE
      • How to maintain proper hand hygiene and follow sneeze and cough etiquette
      • How to maintain social distancing guidelines
      • How to clean and disinfect surfaces and items properly
      • How to enforce health and safety requirements with customers
      • How to recognize areas or practices that increase the risk of COVID-19 exposure, as well as how to report these concerns
    • Implement proper signage throughout the business to remind employees and volunteers of proper health and safety practices.
    • Establish a process for reviewing employee and volunteer’s organizational health and safety concerns related to COVID-19 exposure and determining mitigation methods in a timely, effective manner.


Cleaning and Disinfection Practices

Because businesses possess a wide range of surfaces that employees, volunteers and customers touch frequently, utilizing proper cleaning and disinfection measures is vital. 


Use these cleaning and disinfection best practices:

    • Maintain a stocked supply of cleaning and disinfection products. Be sure to purchase products that meet Environmental Protection Agency criteria for use against COVID-19. Further, review all product labels, safety data sheets and manufacturer specifications to ensure proper storage and use.
    • Designate specific employee(s) to be responsible for maintaining proper cleaning and disinfection practices.
    • Keep in mind that surfaces or equipment that are dirty should be cleaned with soap and water or detergent prior to disinfection.
    • Utilize a well-documented system to track how often cleaning and disinfection take place. Increase cleaning and disinfection frequency for the entire establishment, paying special attention to high-risk areas and items, including common areas, seating arrangements and restrooms.
    • Consider the following changes to restrooms:
      • Allow for doors to multi-stall restrooms to be opened and closed without touching handles, if feasible. This could entail adding a foot pull or encouraging occupants to open and close the door handle with a paper towel rather than their bare hands.
      • In single-occupancy restrooms, use proper signage and materials (i.e., paper towels and trash cans) to encourage occupants not to touch handles. Restrict access to single-occupancy restrooms with a key to allow employee to monitor its use and disinfect it regularly.
      • Use signage to encourage occupants to close toilet lids before flushing and wash their hands before and after using the restroom. 
      • Provide paper towels for drying hands and adequate trash bins. Prohibit the use of air dryers.
    • Install numerous handwashing (or hand sanitizing if handwashing is not possible) stations throughout your establishment, making sure you have stations located at the entrance and exit. Implement signage encouraging employees, volunteers and customers to use these stations frequently.
    • Prevent employees or volunteers from sharing any organizational items or equipment. If employees must share any items or equipment, establish proper cleaning and disinfecting procedures before and after each use.
    • Ensure proper air ventilation throughout the building. Be sure to clean HVAC systems regularly. 
    • Have employees and volunteers place their work clothing and cloth face coverings in a sealed plastic bag after each use, as if the materials are contaminated. Have these materials laundered by washing and drying on the highest temperature setting possible for the fabric. Ensure employees wear masks or face coverings when handling dirty laundry. If your establishment does not provide laundry services, provide employees and volunteers with instructions for safely washing and drying their materials at home.


While having procedures in place won’t prevent someone from asserting a claim against your organization, they can help to significantly reduce your liability exposures and make it difficult to prove they were infected while working with your organization.

Employee and laptop.Employee Benefits: Open Enrollment in a Virtual World

The pace of change that employers have faced in 2020 is unprecedented – and we’re not done yet. If your employee benefits plans renew this fall or January 1, you may need to prepare for a virtual open enrollment. 


Open enrollment is the only time employees can review and change their benefit elections, outside of an IRS-qualified life event change. With the mounting cost of insurance, the stakes are high and employers need to offer robust communications. Fortunately, there are many options to supplant in-person benefit meetings. 

    • Open enrollment drip campaign – Whether via email or text, sending a series of messages before and during open enrollment can keep it top of mind for employees and their families.
    • Open enrollment webinar – Invite people to a short presentation that reviews why open enrollment is important, what’s changing and how to enroll. Added bonus: these sessions can be recorded and repurposed for new hires.
    • Virtual office hours – Offer employees the chance for one-on-one benefits guidance by designating specific times when employees can “pop in” with questions.
    • Open enrollment cheat sheet – Let’s face it, most employees want to know, “What’s changing?” and “What’s it going to cost?” Make it easy for them to find answers with a one-page cheat sheet that provides a high-level overview of carrier or plan changes as well as their new contributions. This is also a good format to remind people of what steps they should take to make changes. 

For more open enrollment strategies, please contact your Brown & Brown Northwest account team.

Homeschool student.Personal Lines: Back to School Planning

This is the time of year when parents and kids usually start thinking about going back to school by making shopping lists for new clothes, backpacks and supplies. But it’s not business as usual this school year, as school districts and parents struggle to decide how best to manage classes during COVID-19.


Overall, schools will likely choose from one of three options for opening the new school year:

    • Distance learning – All instruction is done remotely using technology and other tools
    • In-person schooling – Similar to traditional schooling with enhanced health and safety precautions and procedures
    • Hybrid schooling – Includes elements of both distance and in-person schooling


Another trend that is gaining popularity across the nation is the learning pod, in which parents bring their children together to learn, share resources and provide social interaction. 


There are a variety of pod types, including:

    • Same school with parents Students who attend the same school come together to learn and socialize. The expectation is that the kids’ teachers provide the distance learning material, and the group – with parent leaders, if needed – will make sure they keep pace with the class
    • Same school with a tutor This is similar to the arrangement above, but it’s run by someone who has training as a teacher, acts as a tutor or is a caregiver. The goal would be to supplement what the school provides with someone who can guide the students in place of parents
    • Small, separate school In this scenario, the group resembles a home-school environment, where the curriculum is developed or purchased and the learning is separate from a public or private school


In addition to making sure the leaders of each pod are committed to working on students’ academics and not just their social activities, parents need to ensure that safe pandemic practices, such as wearing masks and social distancing, are enforced. 


One challenge for the pods model is trying to include all children in these groups. There are often community concerns that a group might join together naturally because they are in the same high- to mid-level income bracket neighborhoods, which in turn excludes those with fewer resources. Please check your local area for its education policy on pods. 


Regardless of which option you’re facing, being prepared for a variety of schooling environments can empower you and your child and reduce anxiety. In each case, there are steps you can take to reduce the risks of COVID-19, help your child feel safe and make informed decisions during the COVID-19 pandemic. 


Helpful resources can be found on The Centers for Disease Control and Prevention website. They have created checklists to help guide parents, guardians and caregivers in back to school planning for in-person and hybrid models as well as virtual/at-home learning. 

Business Credit Score Gauge Concept, Excellent GradeSurety: A Disturbance in the Force

Regardless of the massive disturbance to the economy caused by the coronavirus, surety rates and underwriting procedures have remained stable. Similar to nonresidential construction, surety underwriting is a mid- to late-cycle industry, lagging the economic cycle by one to two years. This lagging is the major reason you may not have seen a tightening market response in the magnitude expected, at the very least, but even more surprising is the resilience of credit scores through downward trending economic activity. 


It is worth noting that for some, credit scores could be standing firm for reasons that are political in nature rather than economic. But as we know, history tends to repeat itself, which makes the current future look a hair riskier in the eyes of an underwriter. 


Those familiar with surety know it is no secret that credit scores are a key factor in surety underwriting and rate filings. That means as we heave on into Q4 of 2020 and more assuredly Q1 of 2021, there are expectations of rate increases, program re-underwriting and possible collateral call in extreme cases. Surety principals (the business owner) will undoubtedly experience more underwriting financial pressure from surety and insurance companies as expected claims arise over the coming months.


As the old adage goes – the best time to do something about it was yesterday, but the next best time is today…so whether or not you have recently undergone financial hardship related to COVID-19 that has impacted your business (credit scores or not), Brown & Brown Northwest’s team of surety professionals are there to help along the way.

Reach out today, because tomorrow it might be too late!

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