In March 2020, blockades were introduced in large parts of the United States and in many countries around the world in response to the rapid spread of the new SARS-CoV-2 virus, or coronavirus. A year later, the virus is still raging and COVID-19 has caused more than 500,000 deaths in the United States, but the expansion of vaccines builds confidence that the pandemic can at least be more manageable.
As in other sectors, the eruption caused large amounts of uncertainty and confusion in the area of risk management and insurance. Much is still unclear, but various decisions by courts, regulators and legislators have added some clarity to COVID-19 issues. In this special report, we look back at the concerns that risk managers have faced and what is likely to happen in the coming years
By Judy Greenwald
Shortly after companies discontinued operations during government assignments that began last March the year the first lawsuit seeking coverage for business interruptions was filed.
A few months later, courts began issuing decisions in cases and in most cases benefited the insurers, but the policyholders have also won several victories.
Policyholders are likely to start winning more COVID-19-related business interruption cases, but a clear picture of the litigation landscape will not emerge completely before the Board of Appeal begins to try the cases, many experts say.
About 80% of court decisions have so far been in favor of insurers, with many of the policyholders' decisions issued by state courts.
Policyholder Advocates states that the early slope in favor of insurers may be due in part to the fact that many of the first cases, often commissioned by small businesses such as restaurants, were filed by attorneys who do not specialize in insurance law.
However, as more cases are filed by larger companies represented by specialized insurance lawyers, the win-loss ratio is likely to change, although decisions will also depend on the court and jurisdiction.
Two factors that can determine the outcome of cases are whether a court finds that COVID-19 causes property damage, which tends to outweigh coverage, and whether the policy includes a virus rash, which may outweigh it.
At the same time, despite the current emphasis on business disruption, some experts believe other COVID-19 related issues, such as employment method liability and cyber liability, will become a major focus of pandemic-related disputes (see related story below).
"The tide has already turned" against policyholders, says policyholder advocate Michael S. Levine, a partner with Hunton Andrews Kurth LLP in Washington, discusses the winners' victories.
“There are many cases that have been raised either prematurely or based on policies that do not provide coverage or are based on submissions that do not adequately state the salient facts, and these cases are rejected, but that was to be expected. "
Insurance companies may begin to encounter additional obstacles," said Daniel A. Rabinowitz, an insurance lawyer with Kramer Levin Naftalis & Frankel LLP in New York.
policyholders have been successful in arguing that virus exclusions do not apply, he said, although each case must be evaluated individually.
However, Jeffrey M. Wank, an insurance attorney at Kelley Kronenberg LLP in Fort Lauderdale, Florida, said the courts have mostly ruled right.
"Most courts have, based on science and based on what we know about the virus, found that it does not cause real physical harm" and therefore does not trigger coverage, he said.
The dispute picture will come more fully into focus when higher courts, including federal appeals courts and state supreme courts and perhaps ultimately the US Supreme Court, weigh in, and these rulings can begin to be announced this year, experts say.
Court of Appeal decisions "will help parties on both sides to better understand the legality of the policy language" and "help streamline the process and minimize disputes as it enables the parties to resolve the claims," Levine said.
The question of whether there has been physical harm and whether a policy has a virus exclusion will remain key, experts say.
Micah E. Skidmore, a partner with Haynes & Boone LLP in Dallas, said: "The trend seems to be that courts are persuaded by the argument that if you can document the presence of the virus on your property," if you had employees, patrons or others as you can tell was infected and came to the premises, "it seems to be among the more convincing arguments" to establish that there has been a physical loss, although "it is difficult to generalize."
Tyrone R. Childress, head of insurance recovery at Jones Day LLP in Los Angeles, said, "The battlefield is a little more level" between policyholders and insurers when there is no virus exclusion.
Michael John Miguel, a principal with McKool Smith in Los Angeles, said it was too early to say whether COVID-19 business interruption disputes would be like legal disputes over insurance coverage for Y2K reorganization costs, which ended within a few years after the turn of the millennium , or more like disputes over coverage for asbestos liability, which has plummeted for decades.
Some observers believe that while it may not be mentioned as a precedent in US courts, a UK decision that benefits many policyholders in the matter of business interruptions may affect the US
The UK Supreme Court ruled in a test case that certain policies covered various sickness clauses or loss of access clauses.
"I think the courts will look at the British decision and say, 'It makes a lot of sense,'" said R. Hugh Lumpkin, a partner with Reed Smith LLP in Miami.
Lawyers say that future decisions will depend on factors including the judge concerned and the jurisdiction.
Observers say there has been a mixed reaction from insurers to changes in their policy language to more clearly avoid disputes arising from COVID-19 or future pandemics.
Jonathan B. Sokol, a policyholder's attorney with Greenberg, Lusker, Fields Claman & Machtinger LLP in Los Angeles, said, "I would assume that those who do not have it will certainly be there when this policy is renewed."
Litigation will be expanded
Although much of the COVID-19-related litigation has so far been on business interruption claims, lawsuits are also being filed on other pandemic-related issues, including bodily harm, employment protection and other special risks, observers say.
"Although there has been a tremendous amount of focus, obviously given the number of lawsuits" related to business interruptions, there are broader COVID-19 issues beginning to emerge, "said Tyrone R. Childress, Head of Insurance Recovery with Jones. Day LLP in Los Angeles.
Cases of bodily harm have already been filed by, among others, cruise line passengers, says R. Hugh Lumpkin, a partner with Reed Smith LLP in Miami.
Employers can also face complaints from employees who are required to work and become ill, he said.
In addition, board members and officers have filed claims against companies, such as complaints alleging that companies made unfulfilled promises about their ability to take advantage of the pandemic in any way.
Daniel A. Rabinowitz, an insurer lawyer with Kramer Levin Naftalis & Frankel LLP in New York, said that although the cases will not be a "slam dunk", it is likely that there will be minor disputes over policy language such as It has been in business breakdown cases, which depend on the interpretation of physical loss and injury.
Robin Cohen, chairman of the Cohen Ziffer Frenchman & McKenna LLP in New York, said that while other types of claims will develop, "these business breakdown claims are very, very big."
As a result, "while there will be other claims that will come out of this, I would not underestimate the importance or importance of business interruption."
By Claire Wilkinson
Legislative work to forcing insurers to either retroactively cover business outages due to COVID-19 or to provide future coverage for future pandemics is unlikely to be delayed this year, say legal experts.
So far in 2021, several states, including New York, Pennsylvania, have , Rhode, so far Iceland and Washington have introduced or reintroduced bills that would require insurers to provide some form of retroactive business break coverage for COVID-19.
In December 2020, a bill was submitted to Texas that would take effect September 1, 2021 , and applies to insurances written or renewed on or after 1 January 2022. SB 249 would require insurance interruption insurance to "cover loss caused by a pandemic, including loss caused by a civil authority order to prevent the spread of a pandemic regardless of whether the pandemic caused a direct physical loss to the policyholder's property. "
Jeffrey L. Kingsley, New York-based partner at Goldberg Segalla LLP, said he was not surprised to see efforts in certain jurisdictions last year" to try to eliminate a retroactive exclusion or explain that this virus on somehow was a physical loss to cover. ”
Between March and May 2020, many state legislators introduced bills, some of which would have forced insurers to cover retroactive business interruptions due to COVID-19.
The legislative measures came when companies looked at their property insurance policies to cover business interruptions to recover lost income companies with closures following government shutdowns early in the pandemic.
With the shutdowns now easing in some jurisdictions and the lack of traction for most of 2020, "I do not see an upturn or pressure for retroactive business outages this year," Kingsley said.
compensation has eased a bit because of the financial relief provided by the federal government, he said.
"It would be difficult to sell, if there is no change in the direction of the pandemic, to see legislators really take up it and drive it forward, "said Kingsley.
Steven Badger, Dallas-based partner at Zelle LLP, said there is no indication that legislative efforts to force retroactive coverage are progressing in all states.
" Everyone has realized that it is a non-start-up ", as it is both unconstitutional and fundamentally unfair to change contracts negotiated between insurers and their policyholders before COVID-19, p. ade Badger.
Efforts to legislate for the future to force future coverage are "equally unsustainable", as they will threaten the economic viability of insurers, "or more likely in states where such laws are enacted, the insurance industry will only stop writing insurance because it does not Under some circumstances, a risk can be assumed that all insureds will be affected, Badger said.
By Claire Wilkinson
Revised legislation to create a federal pandemic backstop is in the process of companies looking to recover during
While the Pandemic Risk Insurance Act was introduced in May 2020 by Rep. Carolyn Maloney, D-New York, was modeled after the Terrorism Risk Insurance Act adopted after the terrorist attacks on September 11. A reconfigured bill may look different. , say experts.
In addition to Rep. Malony's bill, various plans were put forward last year, including a taxpayer finance pandemic backstop plan proposed by major insurance industry groups. Policyholder groups also formed a coalition advocating a public-private backstop for pandemic insurance outages, while individual insurers are planning. presented by Chubb Ltd. and Zurich North America.
The proposals followed a letter sent to Congress in March 2020 by John Doyle, President of Marsh LLC, calling for a public-private p andemic risk-sharing program.
The political dynamics in Washington have changed from a year ago, which may have some bearing on this issue, says Robert Hartwig, clinical associate professor and head of the Risk and Uncertainty Management Center at the University of South Carolina at Columbia.
"Increasingly, the industry recognizes that the vast majority of responses associated with pandemic incidents really need to be housed and organized by the government," Hartwig said.
Aid packages that passed Congress in 2020, along with $ 1.9 trillion in relief proposed by the Biden administration, reinforce the idea that the appropriate way to deal with the economic consequences of pandemics is through a "robust federal government response," Hartwig said.
Insurers have also generally said that they do not want a role in financial risk-sharing in line with what they have with TRIA, he said.
"We help facilitate congressional hearings from various participants as they work on a revised PRIA that will hopefully include comments from policyholders and policyholders," said Erick Gustafson, CEO of Marsh & McLennan Cos. Inc.
"We believe it will be a more thoughtful piece of legislation and reflect on from both policyholders and insurers," says Gustafson.
Globally, risk management and insurance communities recognize the importance of developing a plan that helps organizations manage future interruptions due to pandemics, says Whitney Craig, Head of Government Relations at Risk and Insurance Management Society Inc. in New York.
"A public-private partnership remains a RIMS priority because it will give business leaders confidence that their assets are protected, while giving insurers a financial backstop, we would encounter a new pandemic disaster, "Craig said in an email.
In addition to Rep. Maloney, Rep. Emanuel Cleaver, D-Missouri, newly appointed chairman of the subcommittee for financial services for housing, community development and insurance has said that pandemic risks are a focus, according to reports.  RIMS is ready to cooperate and "hopes that a new bill will be introduced in the coming months," Craig said.
By Louise Esola
The COVID-19 pandemic and a new presidential administration have placed greater emphasis on workplace safety in the event of communicable disease.
The US Occupational Safety and Health Administration began working on a standard for infectious diseases for healthcare professionals in 2010, but efforts halted in recent years and prompted several unions to sue the agency on October 29, 2020. The Department of Labor said in a Feb. 16 response to the lawsuit. that OSHA would prioritize the development of the standard.
In the meantime, employers have braced OSHA to possibly create a temporary emergency standard for COVID-19 occupational safety. President Joe Biden issued an executive order on January 21 and called on regulators to determine whether such a standard is necessary and, if so, to issue it by March 15.
The administration on January 29 also introduced COVID-19 "guidelines" that reflected what had been in place during much of the pandemic. The guidelines generally redesigned U.S. Centers for Disease Control and Prevention, and required face protection, social distancing, and contact tracing.
OSHA also urged employers to implement COVID-19 prevention programs, separate and repatriate sick workers, improve safety communication with workers, install barriers, provide personal protective equipment, and routinely clean and disinfect workplaces.
Eric Conn, Washington-based chair of OSHA practice at Conn Maciel Carey LLP, said his company, along with work organizations and other stakeholders, has worked with OSHA to develop an emergency standard for COVID-19 security and that it is " imminent. "
"It is not a traditional regulatory framework," he said of OSHA's development of the emergency standard, which does not allow stakeholders to see a draft and comment.
"We are only doing everything we can to ensure that employers who have managed this crisis for a year can now share with OSHA what works, what does not work, what is a waste of time and money and what would not, ”he said.
By the end of February, three states had already introduced security standards – California, Michigan and Virginia. Oregon announced in late 2020 that it is implementing a regulatory process for such a standard.
Legal experts say that OSHA may include certain parts of state standards, could reproduce the new guidance issued in January as its temporary standard, or continue the work that has been done to create an infectious disease standard.
"They can dust it off (an infectious disease standard) because they've been working on it," said Pat Tyson, partner and head of OSHA practice at the Atlanta office in Constangy, Brooks, Smith and Prophete LLP, following the January announcement. that OSHA would consider an urgent COVID-19 standard.
Another important development since the pandemic began was OSHA's announcement that a COVID-19 infection in the workplace was a detectable disease, according to its rules for reporting workplace injuries.
According to a Reuters analysis, OSHA, which had issued more than $ 4 million in workplace citations to more than 300 employers since the pandemic began, had collected only $ 897,000 in fines from 108 companies, and that more than half of employers who listed for COVID-19 security concerns by federal OSHA authorities had appealed. Most of the citations were issued for violations of the general customs clause and the respiratory protection standard, according to OSHA data.
Mr. Conn said he expects the competition of quotes will continue, even with an emergency standard COVID-19 in place.
It is "a lot of competition because many of them are hesitant," he said. "I'm defending many employers right now because it's such a new area."
By Angela Childers
The development of presumption measures continued in 2020 with the pandemic leading to executive orders and laws that made it easier for certain classes of workers to obtain workers' compensation for COVID-19.
Workers 'laws on the assumption of compensation – which obliges employers to refute employees' claims that their injuries or illnesses have occurred within the scope and extent of their employment – have been in books for almost two decades. These include assumptions for firefighters for certain cancers and for first-line interventions for mental illness caused by traumatic work-related events.
But the extension of such laws to cover a highly contagious disease such as COVID-19 is an emerging issue that could have lasting effects on the labor industry, experts say.
"When you look at the financial impact of these different bills … what this will do for premiums and what it could potentially do for (employees') marketplace can be significant," said Bert Randall, president of Baltimore Law Firm Franklin & Prokopik PC.
“If we start expanding assumptions for jobs in the private sector, will we see any carriers move from certain lines? Will it shrink the market or will it cause premiums to rise significantly?
By August 2020, eleven states had issued executive orders or emergency rules to create a presumption of compensation for certain classes of workers who claimed to have acquired COVID -19 at work, and eight states enacted legislation establishing compensation assumptions. Most of the laws and regulations included first-timers and health care workers, and some included important workers such as retail and transit workers and important government employees.
Some of the laws and regulations have expired, leading to a wave of bills to extend or create a legislative assumption.
According to the National Council on Compensation Insurance, during the first two months of this year, several states passed new presumption laws, while two states rejected such measures. About 20 other states have introduced adoption legislation so far this year.
"It will be some time before we know exactly what the financial implications (of COVID-19 assumptions) will be for the comp system," said John Hanson, Atlanta-based vice president at Alliant Insurance Services Inc. This uncertainty is due to the large variations in the employees covered and the burden of proof in the various adoption laws, he said.
For example, some assumptions are written very narrowly. At the other end of the spectrum, proposed legislation in Oregon does not require a positive COVID-19 test for the assumption to apply and allows workers in all industries with at least 10% positivity to file a coronavirus comp claim. In Hanson.
Gavin Newsom of California created a presumption through executive orders in March last year, which was reduced in legislation passed in September that created a COVID-19 rebuttable presumption for first-time inspectors and health care workers. Although the number of coronavirus claims in the state is much smaller than the early doomsday forecast – with about one in six states in the state related to COVID-19, according to the California Workers' Compensation Institute – it is too early to say how the industry could be affected by continued presumptions. says Amy Puffer, San Francisco-based claims consulting project manager for broker Woodruff Sawyer & Co.
"I know there is concern that these assumptions about communicable disease compensability such as COVID may be widely accepted or permanently adopted and extended to other common diseases," she says.
By Louise Esola [19659002CompensationclaimsforCOVID-19duringthefirstyearofthepandemicprovedtobecheaperthanexpectedbutithasnotbeenaseasytocollectdamagedataasexpectedexpertssay The biggest shock for the labor industry was that a contagious disease such as coronavirus would can be compensated, according to experts who tried to measure the current and long-term effects.
"A year ago, the majority of us were at the damage facility. would say, more likely than not, COVID claims would not be considered compensated … with very little information on how an employee can claim that they got (the virus) at work, says Carol Ungaretti, Chicago-based management consultant with Aon Global risk advice.
Then came the wave of presumptions and laws – as of February, more than 20 states either had a COVID-19 adoption in place or were in the process of setting one up – and with that came the damage activity. The adoption makes COVID-19 disease replaceable for workers who are believed to have been infected at work. Experts say there was early concern that the claims would prove expensive and difficult to deal with given the new nature of the virus.
Recent data, however, point to a milder effect on the labor industry, experts say.
"At the beginning of the pandemic, the hypothetical scenarios and forecasts related to direct cost effects were quite bleak," Kim Haugaard, senior vice president of policyholder services at Austin-based Texas Mutual Insurance Co., wrote in an email. "The current effect has not been as bad as we expected it to have been," he said, noting that COVID-19 claims accounted for only 2% of the insurer's claims activity by 2020.
Trying to get information on how much the claims cost or how widespread injury activity is has been complicated, said Mark Walls, Chicago-based vice president of communications and strategic analysis for Safety National Casualty Corp., during a recent webinar.
"One of the major challenges in analyzing trends in workers 'compensation data is that there is no single source of workers' compensation information," he said, adding that information from rating agencies, various states, research organizations and self-insured entities is silent.
Boca Raton, Florida-based National Council on Compensation Insurance – which collects data from 36 states – reported that most claims have not been serious. The top 5 of COVID-19 medical claims in the first half of 2020 ran about 70% of coronavirus-related payments, according to an NCCI analysis.
NCCI reported in January that 20% of COVID-19 claims included a closed stay; of these, 19% required intensive care services. The cost of hospitalized damages averaged $ 38,500.
Overall, Cambridge, Massachusetts-based Workers & # 39; Compensation Research Institute reported in January that "a large variation in the proportion of COVID- 19 claims among all workers' compensation claims paid," from 1% to 42% in the second quarter of 2020.  "A number of factors may have contributed to the variation, including the severity of the COVID-19 outbreak, the presumption law and the compensability rules," the WCRI analysis stated.
Angela Childers contributed to this report.