COVID-19 has affected all industries, businesses, and professionals. As Hauser Insurance notes, the Insurance industry is one of the most affected with companies struggling to cover Cyber Insurance, Professional Liability, and Management Liability for businesses. Thanks to heightened risks in the industry, insurance companies are forced to conduct more underwriting diligence, coverage adjustments, and rate pressure.
As a result of the impact of COVID-19, insurance companies now have more underwriting questions and conducting deeper diligence than they did before the pandemic. The rates will also increase with companies increasing rates from 15 to 100 percent based on the assessed risks.
It is also challenging for new businesses to get insurance. Some of the coverages that have seen heightened risks are as follows:
- Directors and Officers Liability: As businesses suffer increased financial strain, it is becoming more challenging for directors and officers to manage new business risks. Insurance companies are aggressively doing due diligence on companies and charging 25 percent more rates, according to Hauser Insurance.
- Employment Practices Liability: There are so many businesses forced by circumstances to terminate employees. This has increased the employment practices claims, placing insurance companies at risk. Insurance companies now closely track employment activities, including layoffs.
- Fiduciary Liability: This liability insurance covers negligence, errors, and omissions. The reactive public markets have led to changes in investment performance and this has led to suits.
- Crime: With more businesses opting for remote work for employees, commercial properties are now left vacant, exposing them to risk of theft. Employees are also targeted by hackers as they work more online.
- Cyber: The remote workforce in companies is more at risk of cyberattacks. Companies find it challenging to manage the access to their networks as employees work from home.
- Professional Liability: Due to financial strain, some companies have been forced to shut down completely or limit their operations. This has led to increased suits from clients and other third parties.
Businesses should expect to pay more for insurance and insurance companies have to do a thorough underwriting according to Hauser Insurance.
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