Insurance Agencies Navigate New Landscape Caused by COVID-19

YOUNGSTOWN, Ohio – Area insurance agents say they’re busy connecting with clients, doing their best to answer questions from business owners whose companies are shuttered under stay-at-home orders caused by the coronavirus pandemic.  

Unusual protection measures for COVID-19, the disease caused by coronavirus, have interrupted peoples’ daily lives with mass layoffs or employees working remotely and businesses struggling to hang on.  

These times also have implications for the insurance industry and the independent agencies trying to make sense of it all for customers. 

“When this is all said and done, we’re all going to have to adjust to our lives; what they were four weeks ago are no longer going to exist,” says Merry Wagner, owner of Macchione, Richardson & Wagner Insurance Agency in Girard. “What that new normal looks like has yet to be shaped. Out of every crisis innovation happens. There’ll be a lot of good, bad and ugly.” 

Insurance agencies are deemed essential businesses under Ohio’s stay-at-home order. Most are receiving calls from business owners to determine policy coverage during the shutdown or outright company closings. 

Most conversations begin with the same question: “Is there coverage in the business income policy during the shutdown?” The unfortunate answer is, “No, pandemics aren’t covered.” 

“From our end, with a covered loss, we provide business income,” explains Dan Landers of Landers-Lewis Insurance Agency & Consulting Services, Boardman. “If a store suffers a covered loss like fire, lightning, windstorm or hail and they can’t sell anything, we provide loss of income [coverage]. But because of the pandemic, it’s not covered by a business income form, so that’s where they’re suffering.” 

Wagner says most owners aren’t expecting it to apply, but are calling out of desperation because they have nowhere else to go. 

“It’s hard telling people they aren’t covered,” says Dave Thompson, president of Gibson Insurance. “I’ve never seen anything like this in my 43 years in the insurance business.” 

Even if businesses are deemed essential, many are feeling the effects of a downturn because they’re operating under reduced hours and workforce as people stay home, Wagner points out.  

How employers are handling benefits for employees during temporary layoffs is an individual matter for business owners. Most businesses, as well as their employees, are relying on government stimulus packages, according to Landers. 

What Some Insurance Companies Are Doing 

Agents say they are reviewing coverages to learn what premium costs companies can shave off, either temporarily or permanently. 

Many large insurance companies have been relaxing some requirements, temporarily deferring premium payments and helping with auto coverage for restaurants implementing delivery service.  

Some confusion has risen over Gov. Mike DeWine’s call to waive cancellation and/or late payment fees and to delay premium payments for March, April and May until at least June 1, agents say. 

Thompson says some insurance companies have said they’ll spread premium payments out.  

“This doesn’t mean companies are relieving the debt; it’s delaying the debt,” says Shelley Taylor, president of Paige & Byrnes Insurance, Howland. “I’m telling clients they’re not going to forgive your premium payments, and if at all possible, keep up with this to a certain extent.” 

However, Ohio Mutual Insurance Group announced it is suspending all cancellations resulting from nonpayment of premiums for an indefinite period retroactive to March 16. While bills will continue to be mailed, cancellation notices will not be issued. Late fees will not be charged indefinitely or accumulate for policyholders. 

Ohio Mutual encourages policyholders experiencing financial difficulty to proactively contact billing for assistance and payment plan changes. The accommodations are not a waiver of premiums due and be renewed per normal process. 

“I have never seen any company do this, ever,” Taylor says. 

Long-term Effects  

Experts predict interest rate declines will weigh heavily on the entire insurance industry, but will especially affect operations in the life insurance and annuity sectors. 

Landers says insurance agencies will be affected by COVID-19 the same as it is affecting everyone.  

“We don’t want anyone to go out of business. I imagine there’s a lot of people who won’t recover,” he says. “If they’ve gone month-to-month just keeping their doors open and all of a sudden they have no income, they can’t survive. It will be devastating to a number of companies.” 

Landers expects that when things are up and running again, companies will have less business and for most it will take 12 to 18 months for companies to recover just to the point they were before the pandemic shut down the economy.  

All of the agents say they are offering information about the resources available to companies through state and federal relief packages, but are not handling applications.   

Another frequently asked question revolves around the Paycheck Protection Program offered under the Coronavirus Aid, Relief and Economic Security (Cares) Act, the $2 trillion aid package. 

Agents echo the same sentiment about that program: “It’s a mess.” Thompson says.  

Local banks were not prepared, mainly because of how fast government put it into place, and they had no detailed knowledge of it. 

“We’ve filed three times so far,” Thompson says. “We’re working hard to maintain business and I plan on keeping my employees on the payroll even though they may not be working at full capacity or working from home. I commend my staff right now.” 

Early this month, the Ohio Office for Small Business Relief was created. It’s another avenue to help nearly the state’s 950,000 small businesses, Lt. Gov. Jon Husted says.  

Doing Business Differently 

For the restaurant industry, many insurance agencies are actively working with  outlets trying to stay afloat by offering delivery service. As such, they are writing policies to cover the gap of employees using their own vehicles for deliveries. 

For a business that does not normally offer delivery, most carriers are extending existing gaps in commercial auto coverage forms by providing temporary hired non-owned auto endorsements. These endorsements do not apply to drivers for apps such as UberEats, GrubHub or DoorDash. 

The temporary extended coverage is being offered for no additional premium, according to Taylor. 

Josh White, president of Tartan Insurance Agency, Boardman, says risk levels should be reviewed and adjustments might exist for companies experiencing a change in business operations. He cites as an example curbside pickup for a restaurant that normally doesn’t offer the service. 

Landers says he is working with clients on ways to reduce premiums, such as contractors whose costs are based on payroll or businesses in which sales determine premium costs. 

Thompson points out that some carriers are allowing companies to carry full coverage for only one company vehicle and liability insurance in case of theft and fire on the rest.  

According to Taylor, some people are inquiring about rebates on auto insurance because they are remaining at home and driving less. 

Insurance companies are starting to look at rebates, she says. Allstate says most personal auto insurance customers will receive a shelter-in-place payback of a 15% discount for April and May that will total more than $600 million.  

Wagner notes that Progressive just announced a 20% rebate on April and May premiums, totaling $1 billion. These are not being treated as a reductions in premium.  

Agents encourage customers to check with carriers on possible rebates due to the lack of travel. “These insurance companies are really stepping up for customers in a time of need,” Wagner says.  

Another area customers are making inquiries about is health insurance.  

Wagner says her agency has seen an uptick in calls from people who couldn’t afford health insurance before or didn’t carry it or felt they didn’t need it. 

“COVID is making previously uninsured people more fearful if they did not have insurance because they were healthy or in great shape or just wanted to roll the dice,” Wagner says.  

Tartan’s White says health-insurance carriers Humana and Cigna began to cover testing for COVID-19 at 100%, and that has expanded to Mutual of Ohio and Anthem.  

“The trend is that most carriers are expanding coverage before they’re required to and carriers across the board are relaxing preauthorization,” he says.  

White points out there is a strong push toward telehealth, which has seen a temporary expansion in coverage. Some companies are doing on-demand virtual visits via digital platforms or phone. 

Elaina DeRose from HealthMarkets Insurance Agency says she is seeing an increase in people calling for short-term health insurance policies.  

While some companies continue to pay employees’ health insurance while they’re on temporary layoff, many workers are exploring options because they don’t know how long the virus will affect their employment.  

“The housing industry is being hit hard and I’ve helped some housekeepers from Hilton who were recently laid off. People may be surprised at how affordable it can be,” DeRose says.  

DeRose encourages people to understand what type of health insurance they have and to not be afraid to shop around, including for pharmacy discounts for medicine. 

Copyright 2024 The Business Journal, Youngstown, Ohio.