Insurance and Business Implications of COVID-19

What are the insurance and business implications of the global climate during COVID-19?


Listen to the full episode here, or read the full transcript below

Paul Martin: Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the business commentator and CKOM and not in the studio today is Colin Rooke, the commercial risk reduction specialist with Butler Byers. Colin, we are practicing our physical distancing as they call it or social distancing where we’re not in the studio today. So working from our homes and trying to play catch up to keep the show going with fresh content, and I guess fresh content is not an issue right now with only one and one only topic on everyone’s mind and that’s the insurance and business implications of COVID- 19. And I have no doubt that you are fielding just an absolute ton of calls right now from clients and perspective clients. What’s the nature of the questions they’re asking, and what’s top of mind for business people when their insurance topics come through their mind? 

Colin Rooke: Yeah, so you are right Paul. And I’ll say this is true for I’m sure every single broker in Canada, but we are getting inundated with calls and I already know what the question is before I answer any email. And it’s almost 100% questions around business interruption and coronavirus there’s a lot of concern, there’s a lot of uncertainty. There’s a lot of… It’s tough, right? Like we’ve got businesses that have voluntarily closed. We’ve got businesses that are sort of forced closed or they’re forced closures. And then right away you say, “Hey, I think I have insurance for this.” So your first thought is, “I’m going to call my broker and say, ‘How do I put in a business interruption claim?'” And unfortunately the news for most it’s not great. We’ve been giving a lot of less desirable answers unfortunately around pandemic and communicable disease. 

Paul Martin: Is this what they call force measure or whatever? You hear that terminology and I guess it’s French or something, and we hear it and most people just kind of glaze over I’m guessing when they read it in a contract, but this is the time it gets invoked and all of a sudden we got to learn about it. 

Colin Rooke: Yeah. So we’re getting a lot of questions around the idea of civil authority and I’m being forced to close so then do I have coverage for that? And really the question is, or the answer is civil authority isn’t really the issue. So yeah, there is coverage available. In most cases that, again, I can’t speak to every policy but I’ll say as a rule that a claim could be made if you are forced to close due to civil authority. But the problem it has to be a result of something that’s insurable like an insured peril. And the problem is on most policies I’ll say is that insured parable is usually something physical, so when it comes to civil authority, let’s say you got a bakery and for some reason there is damage to all the buildings around you and you are told you cannot access your premises. 

Colin Rooke: I mean that would be, that would be an instance where you’d say, okay, well the damage next door would be an insured peril. And so I’m being again told I can’t go in so I can put in a claim saying I’m not able to operate. So that’s not the issue. The real issue again is pandemic. So when you’re told to close your business or even if you’ve told you can go in. The challenge is that pandemic is often excluded on most policies. And to elaborate a little further, again, if you get right into the wordings, and again, I’m not going to speak on behalf of every wording, but a challenge that we’re facing, it’s one thing to say for a lot of industries that I’ll take restaurants for example, currently they are closed to the public for the most part. 

Colin Rooke: And again that I think it changes or the definition that definition changes all the time. But they’re forced close to the public but they’re not forced close to operate. So you and I can’t walk in there and order a coffee, but they can certainly deliver a coffee or deliver a pizza. And so that’s another challenge that we’re faced with that. Yeah, you’re limited right now but it’s not a true forced closure. So there, like I said, there’s a lot of uncertainty, there’s a lot of concern. Again, I’m not trying to speak on behalf of every policy wording there is. And there certainly are some out there where it might not be true business interruption coverage. I mean there is in some cases extra money available for extra expenses around pandemic. I know on certain programs or certain like specialty lines of coverage that is available, but it’s certainly not a broad coverage that’s offered to the masses. But you know that’s the challenge that we’re in. And it’s not a Butler Byers’ issue. It’s an insurance issue. 

Colin Rooke: We’re receiving articles daily from all the companies that we work with. We are receiving articles from our industry association, the Canadian industry association. So it’s a hot topic and it’s got a lot of people upset and I understand why that would be. Like I said, it’s not great news. 

Paul Martin: I’m guessing that, or I’m detecting from just the way you’re describing it, that there’s a degree, a level of disappointment among business owners who are calling you and hoping that they were going to get some satisfaction and in fact they’re getting disappointed news. 

Colin Rooke: Yeah, they are. It’s like I said, it’s a lot of we could put in a claim, we could attempt to put in a claim. Unfortunately you look at the wording, it’s pretty black and white. It’s not going to pay. Now I realize that when you’re in this situation, the mindset’s a little different. But in a way it does make sense why pandemic would be excluded. I mean if you think about it, if every single business owner in Canada had the ability to put in a business interruption claim due to pandemic, even if the coverage was widely available, how would they pay? And so if you’re an actuary knowing how widespread or how big the risk could be, it makes sense that they would say, “We can’t have this included on a policy.” Because if we have a true pandemic, we’ve got a virus spreading out of control worldwide, like we do currently. There’s just not… The funds aren’t there. And so that’s why you would see this type of exclusion. 

The funds aren’t there. And so that’s why you would see this type of exclusion. 

Colin Rooke: Another issue that again we’re seeing in the industry, and it’s not unique to Butler Byers, but you look at events, special events, large events, small events, and event cancellation policies. Again, the challenge there is that most exclude a communicable disease and/or pandemic. And in fact, I’ll take it a step further. It’s the threat of whether true or not if you’re forced to close due to again, the chances are low. Again, I can’t speak to every policy available in Canada. But just to be broad about it, chances are low that it’s going to pay. 

Paul Martin: Colin, we’ve got to take a break and we’ve kind of laid out the sort of the scenery, if I can put it that way. Here’s the landscape of what the marketplace is looking like right now. So after this break I want to come back and ask you about what steps business owners can take and how Butler Byers can help them and what tools and resources are available. So you’re listening to Risky Business Commercial Insurance with Butler Byers. My guest is Colin Rooke, the commercial risk reduction specialist with Butler Byers. We’re going to take a little break. 

Paul Martin: Welcome back to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, business commentator here on CKOM. Joining me in studio… Not in the studio, I guess I should those phrases- 

Colin Rooke: Yeah. not in the studio. 

Paul Martin: And not in studio is Colin Rooke the commercial risk reduction specialist with Butler Byers. He is working from his home studio as am I today. So you’re hearing some noise in the background like emails coming in and bonging off computers. So our apologies for that. But I guess everyone’s dealing with that reality these days. 

Colin Rooke: The show must go on. 

Paul Martin: Colin, before the break where talking about the landscape out there and the insurance world is very challenged right now with the COVID virus. What advice can you give to business people or what supports or tools or mechanisms, ideas can you give them to help them navigate these waters? 

Colin Rooke: Yeah, so I will say for the industry as a whole, if you have any questions, reach out, ask us, ask your broker. Familiarize yourself with the wording or ask your broker, ask if there’s any additional coverages that may come into play that maybe aren’t true business interruption. But again, like I mentioned, extra expense or again, I know I’ve seen coverage for bad publicity, for example. Again I don’t want to give false hope, there may be something. And again make sure that you’re looking into that. But yeah, in this challenging time, it’s not all bad news. Butler Byers is still doing what we do best and working on proactive risk management. So I guess in response to COVID-19 we’ve had our team working on tools and resources that we can help our clients with in any way navigate the future. 

Colin Rooke: And without going into great detail, I do want to highlight some of the things though that we do have available. So for example, and I know we’re in the thick of it, but we do have a guide, sort of a pandemic checklist. And you say, “Well, wouldn’t this have been nice six months ago?” And I realize, again, everyone’s already navigating this, but it still has a lot of important information that you may have overlooked. And I know everyone is inundated with information currently. It’s unavoidable, but this guide, this checklist, it helps condense everything. So you can go through the checklist. You could say, “Okay, we’ve done that and there’s a way where you can itemize.” We’ve done it, we’re working on it, we haven’t done it. 

Colin Rooke: But I think every business could benefit from seeing this. And you’re certainly going to see things on the list that you haven’t, despite all the work everyone’s doing. There’s certainly going to be items on that list that would be overlooked because it’s not something that we’re dealing with on a day to day basis. So we do have that available to anyone that needs the help. Well I guess to backtrack a little bit and talk about a sore point, we do have a writeup on business interruption, so if anyone’s interested in sort of a greater definition of the coverage and why it may not be responding, we certainly have that. So we’ve got a lot of like coverage related bulletins that we can circulate. 

Colin Rooke: But as far as reducing risk and improving performance for our clients, we also have tools where for example, we developed a guide to leading remotely. So there’s going to be businesses out there and we have clients out there that are already working or have been working remotely prior to this and are going to continue to do so. But for a lot of our clients and a lot of business owners out there this is new and so we’ve got sort of a step by step guide or really it’s a tool on how to lead effectively in sort of a digital or remote environment. So again, one way we can say, “Okay, we can turn this into a positive and just help our clients navigate this and grow.” 

Colin Rooke: We even have a guide around communication and not a summary of, for example, Zoom meeting, how does it work, the functionalities, that’s not what this is. It’s more of a communication protocol. So when is it important to communicate by email? When is it important to get on the phone and actually hear the other person’s voice in a remote environment? And when is it acceptable to say, “I think we need to have a video and look each other in the eye,” and everything in between? And I think again, for those that are navigating this for the first time, I think it’s a good tool where there’ll be some items on there that you haven’t really thought of. And I think for a lot of companies… And just to expand further, if you don’t have sort of a communication protocol for remote work, and I think a lot won’t, this would be the framework to build that. 

Colin Rooke: And you could take this document and say, “Okay, well here’s our communication policy right here, done for us.” So, I guess we’re trying to take the headache out of navigating what’s to come. And I think the main concern is the unknown and we’re trying to help you prepare now for what could be and even further than that, not just trying to be entirely negative. I think that this move to remote work is going to be great for a lot of businesses and a lat of individuals and you might want to consider the idea that it may continue ongoing. And again, we’re here to help you think through the problem then and plan for that effectively. 

Paul Martin: You made the comment that wouldn’t it have been great to have the step by step guide six months ago? I think that’s been the point of the program that we’ve been doing here for the last few years on this radio station is that you have the ability to walk people through step by step plans and get them prepared for things that are eventualities. That you can just really test your own business preparedness against any eventuality. 

Paul Martin: And we don’t really have any time to dig into that. But just to remind people that Butler Byers’ real specialty in all of this and Colin Rooke’s specialty is to help people through a step-by-step risk mitigation or risk identification and reduction plan. And this is just driving home the point of why you want to do it. It would have been nice to have it six months ago. You don’t, but whatever’s coming six months down the road or 18 months from now, it’d be nice to have that step by step plan already handled. 

Colin Rooke: Yeah, I mean that’s a really good point, Paul. I know we’re out of time, but we’ve had this guide to pandemic for years now, so it wasn’t something that was made in response to COVID-19. And I’ll even admit too, that despite I do talk about pandemic planning with clients that go through our risk reduction workshops. And somewhere in the back of my mind I was even saying, “Is this valuable? Should we be having these discussions?” And yet, here we are. 

Paul Martin: I guess now we know, it is valuable. 

Colin Rooke: Exactly, exactly. 

Paul Martin: Oh, Colin. I’ve got to cut us off. Sorry. Time has jumped upon us again, as always. So I just invite people that if you’ve got any other calls or questions, give Colin a call, he’d be pleased to take it. You’re listening to Colin Rooke, the commercial risk reduction specialist with Butler Byers commercial insurance. I’m Paul Martin. Thanks for joining us for Risky Business. Talk to you next time. 

Colin Rooke: Thank you.