The coronavirus has transformed life for billions of people in just a few short weeks. Since the first U.S. COVID-19 case was reported on January 21st, the number of known cases has grown significantly nationwide, reaching pandemic status and straining healthcare systems. More information is becoming available day by day as the situation evolves.
HOW HEALTHCARE FACILITIES ARE RESPONDING TO COVID-19
All around the country, long term care centers (LTC), physician groups, and hospitals are stepping up to the challenge of caring for our communities during the pandemic. Thousands of nursing homes and assisted-living centers are locking down – halting non-essential visits and screening staff for symptoms in an effort to protect some of the nation’s most vulnerable.7 Even so, the number of coronavirus-linked deaths in long-term care facilities including nursing homes has eclipsed 10,000 according to a Wall Street Journal survey. The virus has hit at least 4,800 facilities and the number of people infected, including residents and staff, totals more than 56,000.9
While the United States has approximately 924,000 hospital beds nationwide, experts have warned that this won’t be enough, prompting hospitals to set up triage tents outside emergency departments, squeeze extra beds into break rooms, and delay elective surgeries to increase hospital capacity in anticipation of a surge of COVID-19 patients.6 In especially hard hit areas like California and New York, the National Guard is working to deliver needed medical supplies and help the Army Corp. of Engineers construct temporary medical stations, while municipalities convert sporting venues to provide additional bed space. In addition to creating more space, thousands of healthcare workers are coming out of retirement to help fight the virus.4,5 Hospital leaders concerned about keeping doctors and nurses healthy, are also working to limit face-to-face contact among staff members.6 Physician groups and other providers are also making a strong pivot away from in-person visits for non-essential appointments and adapting to new ways of reaching patients such as telemedicine. Telehealth technology has the ability to help reduce the demand on health systems, slowing virus transmission and enabling providers to monitor home-isolated COVID-19 patients from a distance. It’s also an efficient means of online training for health workers as guidelines and protocols change.1 In an effort to support increased use of telehealth options during this time, the Federal Communication Commission (FCC) has received $200 million from Congress to aid healthcare providers in purchasing devices and broadband services for use during the pandemic.2
Due to a greater reliance on telemedicine, insurance markets are seeing an influx of requests to add telemedicine coverage to policies, and the marketplace has been very responsive. Because most carriers already maintain a book of telemedicine business, they’re generally pleased to see healthcare providers utilizing telemedicine to help avoid future catastrophic issues and protect community health.
INSURANCE MARKET RESPONSE TO CORONAVIRUS
So far, overall carrier response to COVID-19 has varied. Approximately 10-12 carriers have issued a moratorium of 30-90 days on new business, depending on the product and area. Other carriers are restricting coverage around the exposure in general or including broad communicable disease exclusions. It’s still unclear how the industry will react to COVID-19 in the long term, but some specific coronavirus exclusions are beginning to pop up on renewals, which creates questions around whether or not carriers currently view the virus as a covered peril. The pandemic has created an atmosphere of uncertainty, especially around future COVID-19-related litigation. If coronavirus exclusions are applied, it’s likely that carriers will face an onslaught of lawsuits. While adding COVID-19 exclusions to policies is a way for carriers to define their position up front, it’s not yet clear if these endorsements would hold up in a court of law. The industry has never responded to another illness, such as the flu, like it has to the coronavirus, and the impact on the industry could be substantial as these decisions are defended in court.
The strong reaction to COVID-19 has also caused healthcare facilities to question how and when to provide notice of infection to carriers. Already, areas with known outbreaks are seeing advertising for plaintiff firms targeting healthcare facilities for future COVID-19 litigation. If a facility has a positive COVID-19 test, it is ultimately the insured’s decision if a claim should be filed. Each unique situation must be worked through on a case-by-case basis – calling on agents, policyholders, and brokers to communicate with transparency throughout the process. CRC Group’s Claims Advocacy team may also be able to provide some support with these complex claims situations. Overall, when in doubt, submit the claim.
NEW BUSINESS & RENEWAL ISSUES
While it can be challenging for healthcare clients to look ahead during the pandemic, renewals will approach quickly. The last several days have already brought an uptick in renewal quotes presenting issues for consideration such as new COVID-19 exclusions and higher premiums. Many agents are beginning to field calls from healthcare clients about COVID-19-related exposures like new external medical stations and temporary hospitals being constructed to help with surge and hospital overflow.
Renewal retention will be very important going forward because of the vast unknowns around future market changes. Some carriers are going so far as to avoid writing any new business with potential for coronavirus losses in the future. Agents should be sure to undertake thorough discussions with clients considering moving to a new carrier at renewal. It’s important to clearly outline the kind of information that must be disclosed to move coverage, including any known COVID-19 incidents.
Policyholders and agents should also keep an eye on premium financing. When premium financing is executed the financier has the right to issue a coverage cancellation request if the insured misses a payment. Before issuing a premium finance agreement (PFA), agents should contact the financing entity to discuss their stance regarding leniency. Underwriting may also be willing to reduce earned premium to help insureds achieve a lower down payment and free up cash flow.
As always, agents and brokers should strive to get ahead of renewals. However, some carriers have indicated they won’t release renewal quotes greater than 30 days ahead of renewal due to the rapidly changing situation. It’s likely that additional carriers will take the same position. In these circumstances, rushing won’t yield positive results because no one knows what the market will look like in 2-3 months. It’s also important to keep in mind that many healthcare industry employees who would be working on obtaining renewal information aren’t considered essential and are currently barred from entering hospitals or medical facilities. Agents may need to request 3-month extensions from carriers in order to gather the information needed for renewal.
There is no precedent for this pandemic, but CRC’s healthcare practice group is comprised of specialists who communicate and collaborate daily to help retailers work through these new challenges. CRC’s team makes the most of a unified approach and leverages strong partnerships with risk consultants able to provide productive guidance around client exposures. Insurance is a relationship business, and CRC maintains some of the industry’s strongest ties with leading carriers in the healthcare space. Agents with any questions should contact their CRC Group producer to discuss how we can help healthcare clients prepare for and protect against coronavirus exposures. Contact your CRC Group producer for more information.
- Tom Levin is a Vice President in the CRC Chicago office and Healthcare Practice Group Leader.
- Corey Daugherty is a Broker in CRC’s Birmingham, AL office specializing in Healthcare Professional coverage.
- Rusty Hughes is a Senior Broker in the CRC Birmingham, AL office specializing in the healthcare and assisted/senior living industries.
- Telehealth in the Time of COVID-19, Mobi Health News, March 31, 2020. https://www.mobihealthnews.com/news/europe/telehealth-time-covid-19
- Coronavirus Outbreak: White House Task Force May Suggest General Public Wear Masks, Modern Healthcare, March 31, 2020. https://www.modernhealthcare.com/safety-quality/coronavirus-outbreak-live-updates-covid-19
- Coronavirus Disease 2019 (COVID-19), Centers for Disease Control and Prevention, April 6, 2020. https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html
- Queens Stadium to Be Converted Into Temporary Hospital in Coronavirus Fight, Wall Street Journal, March 30, 2020. https://www.wsj.com/articles/queens-stadium-to-be-converted-into-temporary-hospital-in-coronavirus-fight-11585605068
- New York Will Create More Temporary Hospitals to Handle Surge in COVID-19 Patients, U.S. News, March 27, 2020. https://www.usnews.com/news/health-news/articles/2020-03-27/new-york-is-establishing-more-temporary-hospitals-to-handle-surge-of-coronavirus-patients
- Surge in Coronavirus Patients Threatens to Swamp U.S. Hospitals, The Washington Post, March 15, 2020, https://www.washingtonpost.com/business/2020/03/14/hospital-doctors-patients-coronavirus/
- Nursing Homes Becoming Islands of Isolation Amid ‘Shocking’ Mortality Rate, The New York Times, March 11, 2020. https://www.nytimes.com/2020/03/10/us/coronavirus-nursing-homes-washington-seattle.html
- Number of Long-Term Care Facilities with COVID-19 Cases Tops 400 Nationwide, NBC News, March 30, 2020. https://www.nbcnews.com/health/health-care/number-long-term-care-facilities-covid-19-cases-tops-400-n1172516
- Coronavirus Deaths in U.S. Nursing, Long-Term Care Facilities Top 10,000, Wall Street Journal, April 22, 2020. https://www.wsj.com/articles/coronavirus-deaths-in-u-snursing-long-term-care-facilities-top-10-000-11587586237