Category Archives: Risk Management

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‘Take-Home COVID-19’ Claims: Preparing for a Second Wave of Coronavirus Litigation

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The Spanish Influenza epidemic came in three waves, with the first hitting in March 1918, the second in the fall and the third in the winter of 1919. The U.S. Centers for Disease Control and Prevention considers the second wave to have been the most deadly. In the United States, well over half of the epidemic’s death toll of 675,000 occurred during the second wave. It is no surprise then that public health experts were already warning of the possibility of a second wave of the coronavirus pandemic when the world was just beginning to acknowledge that the first wave was upon it in February.

Personal injury mass litigation also comes in waves. Consider asbestos: In the first wave, individuals who worked directly with asbestos filed workers compensation claims. Workers exposed to asbestos in products filed products liability suits during the second wave. A third wave included “take-home asbestos” claims in which workers’ children and spouses sued for illnesses caused by exposure to asbestos fibers taken home from work. A fourth wave is now underway with the alleged asbestos contamination of consumer talc products.

The first wave of personal injury coronavirus litigation emerged in early March when a married couple sued Princess Cruise Lines for gross negligence for placing “…profits over the safety of its passengers, crew, and the general public in continuing to operate business as usual.” Many similar individual and class action lawsuits have followed. According to an analysis by the Miami Herald, some 3,600 cruise line passengers have contracted COVID-19 and more than 100 have died. 

The situation in nursing homes is far worse. Nursing home residents account for an estimated 40% of U.S. coronavirus deaths thus far. Predictably, wrongful death suits filed by the family members of nursing home residents are surging, even as some states move to shield nursing home operators from liability. Personal injury lawsuits have also been filed against hospitals, meatpackers, restaurants, grocery stores and warehousing operations.

However, as the first wave of the coronavirus pandemic subsides, personal injury litigation may subside along with it. But what if the pandemic has a second wave? Although there is a great deal of uncertainty, public health experts now believe that there is no inherent seasonality to COVID-19 itself, but they remain deeply concerned that a combination of complacency and greater indoor activity could lead to a second wave of infections in the coming months.

What would a second wave of coronavirus personal injury litigation look like? One possibility that modelers at Praedicat are considering is a wave of “take-home COVID-19” litigation arising from occupational infection, coupled with high rates of intra-family transmission. Praedicat modelers estimate that 7-9% of COVID-19 deaths in the first wave have been family members of workers in essential industries who acquired coronavirus at work. With widespread testing and improved contact tracing, take-home transmission could be relatively easy to demonstrate during a second wave. The first take-home COVID-19 lawsuits were filed in August against an electrical supply company and a meatpacking facility, and the precursors to these complaints are present in earlier lawsuits filed against Amazon and McDonald’s.

Many public health officials believe that it is entirely within our power to keep a second wave of the virus from forming while we wait for a vaccine to be developed and deployed. A unified and steadfast public health campaign is critical if we are to avoid a second wave, individual companies working to limit transmission among their workers and customers is as well. First and foremost, this means closely adhering to federal, state, and local guidelines and industry best practices regarding disinfection, screening and testing, social distancing, and the use of masks and other personal protective equipment. Employers might also work to raise awareness of take-home exposure and the risk to vulnerable older family members or those with pre-existing conditions like diabetes that have been shown to elevate the risk of life-threatening complications associated with COVID-19.  Depending on the circumstances, maintaining social distance at home may be just as critical as maintaining social distance at work.

While a second wave of the pandemic may be unlikely, some level of infection, illness, and litigation is sure to be with us until there is a vaccine. The best protection against liability is making the safety of workers and customers paramount. But risk managers need to prepare for the worst and should also be reviewing the availability of coverage for employment related coronavirus claims, including take-home exposure. The employers liability exclusion under a general liability policy, for example, might exclude claims made by the family members of workers.

RIMS ERM Conference Preview: Q&A with Keynote Dr. Andrea Bonime-Blanc

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This year’s RIMS ERM Conference will be held virtually on November 4 and 5, 2020, promising two days packed with informative sessions featuring global risk leaders. The conference kicks off November 4th with a live keynote delivered by Dr. Andrea Bonime-Blanc, founder of GEC Risk Advisory and the author of Gloom to Boom: How Leaders Transform Risk Into Resilience and Value. She will also answer questions from the audience during a live session on November 5th.

Andrea Bonime-Blanc

Dr. Bonime-Blanc recently appeared on RIMScast to discuss her upcoming keynote; the role technology has played in environmental, social and governance risks (ESG); and what risk practitioners must do to succeed today. Check out some highlights below, and download RIMScast episodes 100 and 101 for a deeper dive with Dr. Bonime-Blanc into topics such as diversity, strategic risk management and ways ERM practitioners can generate and retain value. If you’d like to watch her keynote and join RIMS for the rest of the ERM Conference 2020, registration is now open for all attendees.

How did you first begin using and implementing ERM in your career?

Dr. Andrea Bonime-Blanc: I was the general counsel of a startup within a much larger utility company, and we were the global division that was going all over the world in the mid- to late-1990s and early 2000s looking for electric power generation distribution opportunities. I became the risk manager because…[someone] needed to put the risk hat on. We ended up creating programs, policies, procedures to really perform risk management. Building power plants in the middle of the jungle of Colombia or negotiating a joint venture with a Chinese government corporation running a coal mine in northern China presents a number of risks.

When did you notice how vital it was to “wear the risk hat”? 

AB-B: I’ll give you the example of an environmental, health and safety risk: When I was at PSEG, we went into a lot of different countries, including at least six or seven major Latin American countries that were privatizing their electric assets. There were competitions to acquire those assets in the first place, which created a whole bunch of risks from a standpoint of fraud and government corruption. I supervised the legal teams, and also led audit and finance teams. We had utility folks who understood the environmental, health and safety aspects of the assets we were looking at. There were cross-functional and cross-disciplinary teams that would work with the legal department and the general counsel’s office to figure out the risks involved with acquiring those potential assets. It showed how ERM done properly provides that way of collating and collecting really important, strategic information that is necessary at the highest levels of an organization.

How can diversity—of people and perspective—influence ERM in an organization?

AB-B: ERM is a collaborative process. It requires many different minds. A good ERM program will draw upon the knowledge of other key people and functions within an organization. If it’s a standalone program, it won’t work. Drawing on the knowledge and expertise and experience of your colleagues in different parts of the organization is crucial. Likewise, ESG plus T is all about understanding your non-financial issues as well as the risks that will have a financial impact.

You noted the addition of “T,” which stands for “technology”—why is technology so integral to ERM now, and how does it tie into your keynote?

AB-B: The technology piece has become so overwhelming, so suffusing, so minute-by-minute for us in the world that we live in—whether it’s negative like cyberattacks, or positive things, and there are so many other issues in between. We’re just starting to scratch the surface of both the negative and the positive in these technology issues.

Risk professionals have a role to play in creating the information that reaches the management and the board, and building a risk savvy culture. This includes building ERM that is integrated with the strategy of understanding the ESG+T issues that are part of your business, and how you integrate with crisis management and business continuity, for example. These are all pieces of the resilience model that I will share at the end of the keynote. It is something that risk professionals really need to understand, because it not only liberates you from your silo—if you’re in a silo—but it also demonstrates your value to the rest of the organization.

RIMS Virtual Advocacy Week: A Q&A with Florida Insurance Commissioner David Altmaier

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Today, RIMS is taking its annual Legislative Summit online, kicking off the first RIMS Virtual Advocacy Week. Featuring a full slate of networking, a panel on pandemic insurance, updates on the 2020 U.S. elections, and hands-on advocacy with members of Congress, RIMS Virtual Advocacy Week is still open for last-minute registrations, if you want to join in on the action.

On Wednesday, September 16, the agenda includes a fireside chat with Florida Insurance Commissioner David Altmaier, who is also president-elect of the National Association of Insurance Commissioners (NAIC). Commissioner Altmaier has held the position for four years and has been with the Florida Office of Insurance Regulation office for nearly 12.

Altmaier recently appeared on RIMScast to discuss the issues he will address in Wednesday’s session, most notably the impact COVID-19 has had on the landscape of business interruption coverage. Check out the highlights below, and download the episode for Commissioner Altmaier’s full interview and a deeper dive into other topics such as ORSA reports, the Terrorism Risk Insurance Act (TRIA) and the National Flood Insurance Program (NFIP).

What playbook did you use to prepare and react to COVID-19?

David Altmaier:  Our response initially looked a lot like what we would do for an inbound hurricane: We assembled what we call our “incident management team,” and started to look at the types of needs of consumers from an insurance standpoint. We put into place mechanisms that we thought would be helpful as the pandemic began to take hold in Florida and around the United States. And we saw insurance commissioners around the country doing the same thing, obviously, as the pandemic unfolded and we started to see other risks and concerns emerge.

COVID-19 has been at the forefront of all of our regulatory discussions going back to March of this year. and that will continue to be at the forefront of our discussions even after the pandemic has concluded.

Business interruption insurance is closely tied to it and has emerged as one of the more pressing insurance issues as a result of the pandemic. We have seen issues like telemedicine and catastrophe response in a virtual setting, for example, also come up as a result. [That has] impacted how we go to work every day and how we interact with our stakeholders, and I think those will be some worthy discussion topics as well.

How can the risk management community drive meaningful change in regulations, policies and legislation?

DA: As discussions take place about an event that we haven’t seen in a really long time, like a pandemic, there will be a lot of ideas that come up in terms of how to react to the current pandemic, as well as how to prepare for future pandemics. And I think that, as we have those conversations, there’s going to be a multitude of stakeholders whose viewpoints are important.

Risk managers are certainly going to be at the top of that list because they are going to understand the risks that the insurance industry faces. We see ideas of what level of responsibility the insurance industry [should have] in terms of covering things like business interruption insurance. Their expertise will be invaluable as we begin to work with state and federal leaders in crafting policies that can assist with the current pandemic, as well as future pandemics.

Own Risk and Solvency Assessment, or ORSA, is a framework heralded by the NAIC. Why should risk and insurance professionals look to ORSA reports for guidance?

DA: ORSA reflects how our insurance market, along with other majors of our economy, evolves over time and responds to new and emerging risks. It’s a constantly changing environment that regulators are trying to evolve along with, and our teams here in the insurance departments are trying to make sure that we stay ahead of the curve in terms of identifying those emerging risks.

The ORSA report is a glimpse into the thought process for our larger companies and groups into the boardroom and into the C-suites. [It features] theories on their own risk and how their unique position in the marketplace might expose them […] and require them to take steps to mitigate those risks. It’s a really critical piece of information for regulators to have as we build our own supervisory plans, going forward. Obviously, the pandemic that has occurred—like with any catastrophe—potentially highlights things that may have previously not been considered.

Let’s talk about force majeure. The pandemic has inspired new legislation to be drafted that affects the language of insurance policies in an effort to cover interruption. Where does the NAIC stand on that?

DA: NAIC sent feedback to Congress early on, in early to mid-March, with our thoughts that requiring carriers to cover losses that weren’t previously contemplated under the policy forms could do a lot more long-term harm than short-term good.

We have seen some state houses file state legislation that would be similar, in that it would require carriers to cover business interruption losses even if the policy forms didn’t contemplate that. We’ve sort of left it to individual insurance commissioners in those states to work with their legislatures on what’s best for their market.

Hurricane Laura Leaves Destruction—and Pandemic-Related Recovery Challenges

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Hurricane Laura made landfall in the United States at 1 a.m. on Thursday, hitting Louisiana and Texas as a Category 4 storm with maximum sustained winds of 150 miles per hour and what National Hurricane Center officials called “unsurvivable” storm surge. In such ferocious wind, thousands of homes and businesses were damaged or completely destroyed, hundreds of thousands were left without power and, as of Thursday evening, at least four people had been killed.

While forecasters initially expected the storm to lose intensity before reaching land, it rapidly intensified this week, becoming one of only 10 hurricanes to make landfall in the continental U.S. with winds over 150 mph since modern recordkeeping began in 1851. After windspeeds nearly doubled on Wednesday, officials in Texas and Louisiana ordered several hundred thousand people in the storm’s path to evacuate, but many were either unable to leave or chose not to. Increasingly severe storms in the area in recent years may have left some feeling prepared or resigned to ride out the storm.

Others faced difficulties related to the pandemic. As Risk Management recently reported, many experts have expressed concern that the COVID-19 pandemic could significantly complicate hurricane season this year, increasing the risk to individuals and businesses and making disaster recovery more difficult. Ahead of Laura, NPR reported that emergency shelters had a hard time safely accommodating evacuees without overcrowding and had to direct many to hotels. Pandemic-related job losses may have ruled that option out for some. Mayor Nic Hunter of Lake Charles, which was particularly devastated in the storm, told NPR that he “suspects the coronavirus pandemic and economic hardship are leading many people to take pause.” The outlet also reported that experts are concerned that mass evacuations from the hurricane could lead to new outbreaks in the region.

Now, the recovery process will undoubtedly be impacted by the pandemic as well.

“The global health crisis is going to have a major impact on recovery from any major storm, including Hurricane Laura—the stress of natural disaster becomes more intense when it unfolds against the backdrop of a highly contagious viral outbreak,” John Dickson, president and CEO of flood insurance provider Aon Edge, told Risk Management in the wake of the storm on Thursday.

For example, he said, “If you think back to hurricanes like Katrina (which hit about 15 years ago almost to date) and create a mental image, you see the community banding together to respond in close physical proximity. Similar images emerged from last year’s prolonged flooding along the Missouri River. In those and other events, assembly lines formed to fill and deploy sandbags—a task impossible to do six feet apart.”

Dickson noted that technology increasingly used by insurers (also known as risktech) would be more important than ever in responding to natural disasters this year as emergency response must be balanced with safe social distancing practices.

“Smart phones and basic technology can help homeowners achieve the recommended preparation steps and stay safe during a storm,” he advised. “For example, taking pictures and videos with date and time stamps could minimize the need for on-site inspections and physical proximity to claims adjusters.”

For insurance professionals, he noted, “The insurance industry is thinking through very tactical steps to ensure policies and procedures are in place to protect those who are on the frontlines when a hurricane hits. Drone technology offers the opportunity to take photos remotely, and computer models help better quantify risk and manage work forces.”

For more insight and actionable guidance on risk management for hurricanes and other natural catastrophes, including disaster preparedness, recovery and insurance, check out the following pieces from Risk Management:

Before Disaster Strikes: How to Prepare for Natural Catastrophes
How does an organization ensure it is prepared to minimize losses and recover quickly following a natural disaster? Long before a disaster strikes and property damage occurs, the best response plans begin with careful negotiation and placement of well-defined property coverage. Read more

Key Considerations for Disaster Planning
Meticulous disaster response planning has never been more critical. When developing a plan, it is important to involve key stakeholders and review every step that your business, your network and your vendors must take if a natural catastrophe impedes operations. A strong plan should address these key questions. Read more

Weathering Hurricane Season During the Pandemic
Pandemic-related social distancing guidelines and supply shortages could make it harder for business owners to protect their properties should a storm happen, making it even more important to have an action plan in place. These key considerations can help businesses owners mitigate potential storm risks amid COVID-19. Read more

Understanding Post-Storm Business Interruption Coverage
Whether in the impacted area or beyond, businesses suffering from supply chain disruptions after hurricanes and other storms should look to their property insurance policies for contingent business interruption coverage. Read more

Natural Disaster Planning During COVID-19
As the COVID-19 pandemic continues, government authorities and disaster-response entities are over-extended and may not be able to provide assistance as readily this year. It is more important than ever that companies make backup plans and assess the potential impact of shortfalls in their disaster response protocols. Read more

The Human Element of Disaster Recovery
Crisis and disaster recovery plans offer a critical advantage when catastrophe strikes, helping mitigate the impact on facilities, information systems and equipment. Just as important, however, is considering how a disaster can affect the company’s workforce. Read more

Ensuring Insurance Recovery After a Hurricane Loss
These seven tips can help policyholders resolve disaster insurance claims in the wake of hurricanes and other natural catastrophes. Read more