I run. Typically, it is when I clear my mind and just listen to the birds. Lately I have found myself thinking through different topics or repeating a mantra, one-word phrase or quote that pops into my head.
Today was a long run day. Often, I wake up early on Saturday or Sunday and hit the pavement to log a few extra miles while the world and my world (wife and kids) are waking up.
One of the things you learn with endurance training is that there is a whole entire landscape out there that is best appreciated by foot. No matter where you live, most will never experience the hidden backstreets, secluded path along the river, or trail through the woods. We are creatures of habit and unfortunately that prevents exploration. We stick to the same route over and over. It is safe.
On today’s run I found a new path. I explored and let my mind wonder. Perspective. That word played on repeat in my head. Perspective. Perspective.
I was surrounded by natures beauty but kept thinking about a conversation I had with our agency president, Mike Byl, in late March. At that point we were only a few weeks into the heat of the COVID-19 battle. Human tragedy and economic disruption were occurring. With deep sympathy this was acknowledged. We were in the early miles of the marathon ahead, but he shared a futuristic perspective.
In short order our perspective on flexible schedules, remote work, customer experience and virtual selling changed. The trajectory of many of the communities, individuals, and organizations we serve changed.
It was apparent we were venturing down a new path. Rather than retreat we were committed to embracing change with a focus on improvement, employee wellbeing, and new opportunities.
The entire industry is forced with the same. We are grappling with a global health crisis. People are being forced into unemployment and most recently a social movement is challenging us all to recognize our thoughts and actions.
That leads me to temperature checks. I think I do this about a dozen times a day. It is the new norm so let us pause, put our mask on, and do a temperature check on the insurance industry as we tackle the second half of 2020.
Property & Casualty Market
Regarding Covid-19, the hot topic out of the gates was if business income interruption coverage would be triggered and help cover the financial loss many employers suffered. Business income interruption coverage typically can only be triggered if you have property loss that leads to the business interruption, thus the industry’s stance was that it would not apply. In addition, many policies specifically list virus and bacteria as exclusions.
Prior to the pandemic, the Property & Casualty market had been changing from a soft market to a hard market. The P&C market goes through cycles characterized by periods of soft market conditions, in which premium rates are stable or falling, and by periods of hard market conditions, where rates climb, coverage can be hard to place and insurance carriers focus on increasing profits.
Today, the hard market is impacting most lines of insurance and most industries. We anticipate that this will continue. In our region we are specifically seeing this on property, auto and excess (umbrella) lines of coverage.
There are a few silver linings. With most of the country being shut down we have seen a trend showing auto losses down as well as non-Covid-19 related work comp losses also down. In addition, there has been delayed civil litigation which may help improve settlements.
What can you do? During the hard market we strongly encourage business owners to lace up their shoes and lean in on their risk mitigation strategies to help prevent claims and differentiate themselves from the masses. We can help!
This temperature check is a little harder to read. It is kind of like when you hold the thermometer up to your forehead and the dial reads differently each time. I will focus on three topics to follow for the remainder of the year and address future rate indication for the group sector.
Telemedicine. My wife is a physical therapist and she has been wanting to make a run at telemedicine for quite some time. Other industries have embraced virtual meetings, but healthcare has been a bit slower to adapt. I would venture to guess that Covid-19 has accelerated telemedicine by 5, 10, 15 years.
Financial wellness programs. 2020 has presented significant financial challenges and highlighted the unprecedented levels of stress employees face in their everyday lives. Financial stress has a negative impact on performance. As we climb out of the pandemic it will be important for employees to have access to financials tools and resources.
Health reimbursement arrangements. For those in the benefits space, the topic of HRA’s seems to come and go. When the economy is disrupted the door is open for employers to think different. With an HRA, an employer reimburses employees for medical expenses and in some cases, insurance premiums, rather than provide insurance to employees as a company. With the unemployment numbers as high as they are and a presidential election upon us, I am confident we will hear this term come up as we approach 2021.
From a rate indication standpoint there is one thing that is certain, everyone is uncertain. Insurance companies have had to pay more to cover coronavirus treatments while on the flip side much of the population has chosen to put off elective procedures thus resulting in reduced spending. This is skewing projections for the remainder of the year and next year making it difficult to pinpoint whether medical-cost trends will be significantly lower or higher next year.
As I finished my long run, I watched the sunrise turn our community to gold. There is something energizing and rejuvenating about seeing a new day unfold.
I find that same enthusiasm watching changes within the insurance sector unfold. Times of trial and exploration are often great teachers. This pandemic has proven to be the same on several levels.
I would challenge all of us to embrace the new path we are on. Now is the time to be steadfast and go the extra mile to make a positive impact on the world around us.
Listen to the birds, be kind, and please take your temperature.
Partner, Business Solutions Advisor