2020 was a year that most insurance companies, and their customers, would like to see disappear in the rear view mirror. Still, as Steven Spielberg taught movie-goers in the 1993 blockbuster “Jurassic Park”, objects really do appear closer than they may appear to an insurance industry facing ongoing threats in 2021.
Key issues like a global pandemic, a changing of the guard in Washington, and an economy upended by COVID-19 - all of which were mainstays in the Fall 2020 Insurance Preview published by InsuranceQuotes earlier this year - will continue to loom large when the calendar flips to 2021 in a couple of weeks.
So, how will all those issues (and other hot button industry concerns) play out in 2021?
In the following report, insurance experts break out their crystal balls and make some interesting calls on what the new year will bring for the insurance industry, as well as what it ultimately means for the myriad consumers the industry serves.
The Fate of Business Insurance in 2021
From a property and casualty insurance standpoint, the coverages and conditions of an insurance policy are unlikely to be influenced significantly by the upcoming presidential administration change in January, or the introduction of the COVID-19 vaccine.
“There is a possibility for a public/private partnership regarding reconsideration of the availability of business income coverage,” said John H. Dwyer, president of Quilty, Dwyer, and Larkin Insurance Agency, in Kingston, N.Y.
Dwyer said that in 2006, an “Exclusion of Loss Due to Virus Or Bacteria” form was added to most (if not all) commercial policies nationwide, and it applies to all forms and endorsements within the policy. “Consequently, there could be development of an insurance product that functions similarly to flood insurance, which may be able to provide relief to businesses who incurred interruption of their business income due to operating restrictions put in place to protect public safety.”
“Many of us of course are waiting to see what may be offered, and if such a product were to become available, there would be questions as to how the coverage gets underwritten and, more importantly, what the premiums would cost the policyholder,” he added.
The Outlook for Travel Insurance
Expect travel insurance to continue not to cover anything COVID-related, said P.J. Miller, partner and independent insurance agent with Ohio-based Wallace & Turner Insurance.
“There may be some insurance carriers that could bring forth new coverages that could cover some COVID-related items, for a fee, with conditions,” Miller said. “This would potentially exclude coverage for the traveler, but cover some expenses for cancellations of usage, or cover the traveler but not the cancellations.”
Industry travel insurance policies will also most likely require a more in-depth questionnaire to purchase coverage. “For example, you’ll get questions like “have you received the vaccine”, “are you traveling internationally”, “are you traveling to a hot zone;” and what is your age and do you have pre-existing conditions,” among others,” Miller said. “At a minimum, expect rates to rise.”
A Special Look at Events Insurance
Can large special events including weddings, conventions, and concerts make a comeback and if so what are the insurance implications? That corner of the insurance industry should see more of the same in 2021 as well.
“Coverage is available now and will be available with the same conditions that are currently in-place – no coverage for anything COVID-related,” Miller said. “Or, event insurance could be based on number of attendees, such as the higher the number, the higher the premium. Additionally, some carriers may entertain smaller events, with specific conditions and restrictions.”
Policy prices are already skyrocketing for event insurance heading into the new year.
“The effects of COVID-19 on contingency insurance market have been devastating.” said Matthew Dewen, director of Full Time Cover, in London, U.K. “With a number of high profile losses, firms are shrinking in capacity to write events insurance.”
Dewen said that on events that have been able to go ahead during the COVI-19 crisis, his team has seen up to a 200% price increase in event insurance policies. “Not only have events been hit with huge price increases, we are noticing more restrictions happening, as well,” he said.
Will Health Insurance Cover the COVID-19 Vaccine?
“Thanks to the CARES ACT passed by Congress in March, COVID-19 vaccines will be covered free of charge for Medicare beneficiaries,” said Christian Worstell, a licensed insurance agent and a senior writer for MedicareAdvantage.com. “Medicare will also cover two doses of the vaccine if it's needed. In addition, CVS and Walgreens reached an agreement with the CMS in October to help provide vaccines to residents at long-term care facilities and nursing homes.”
Additionally, the demand for simplified issue no-medical exam life insurance will continue to increase in 2021.
“Even with the vaccine underway, people are still apprehensive about letting people into their homes to get life insurance medical exams,” said Randy Vander Vaate, president of Funeral Funds, in Dallas, Tx. “Even with the vaccine underway, people are still apprehensive about letting people into their homes get life insurance medical exams.”
Consequently, the pandemic has increased the demand for no-medical exam life insurance in 2020, and this demand will continue to grow in 2021. “More than a third of life insurance companies have expanded and accelerated their underwriting to accommodate this demand,” Vander Vaate added. “People will opt for this option and most likely get it after the start of the year as part of their annual financial planning strategy.”
Restaurant Insurance for the Courts to Decide
COVID-19 has substantially increased risk in a number of areas in the restaurant and bar industry. “That especially includes workers’ compensation, general liability if the restaurant is the cause of outbreaks and employment practices liability due to layoffs and furloughs as restaurants open and close,” said Justin Nabity, founder and CEO of Nebraska-based Physicians Thrive, a financial advisory group aimed at physicians.
Other insurance specialists expect restaurant insurance coverage to wind up in court across the U.S.
“As with EVERY business or entity, the lost income due to COVID-19 will continue to be excluded (not covered), even though restauranters might have seen a few courts mandate that the insurance carrier pay the business income claim,” Miller said. “This will be fought, appealed and likely end up in a Supreme Court (state and federal). It is clearly excluded in 99.9% of all insurance policies, so it’s not just a carrier declining to pay “just because,” it’s a part of the contract; therefore, the carriers will contend that this will lead to a system of ignoring contract language.”
Lights, Camera... Film and TV Production Insurance
The film and television industry will see a continuation of strict guidelines. “Those guidelines will be focused on locations, contracts with studios, waivers, disability claims for actors unable to work due to COVID-19 infections, and on down the line to the theatres, nationally and internationally,” Miller said.
A 4-Step Action Plan for Insurance Consumers
Given the high level of volatility in the insurance sector in late 2020, it’s important for consumers to start early, be thorough, look at unique options and work with an expert. Following these steps will help consumers reduce their premiums and have the right kind of coverage when they need it most.
Nabity offers these tips and guidelines.
1. Start early. “Get your renewal information together early to get your submission to the top of the pile for carriers,” Nabity said.
2. Be thorough. “The more detail you can provide on how you are a better risk than others similar to you, the less you will be impacted by overall insurance rate policy increases,” he added.
3. Look at unique options. “Think about unique structures or insurance products that may be lower cost or protect you from new risks that may become real risks,” Nabity said.
4. Work with an expert. “Make sure you are working with someone who is an expert in your particular industry or who specializes in the specific type of insurance you’re seeking,” Nabity added.
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