Reopening a Business After the Coronavirus Shutdown

As the coronavirus (COVID-19) pandemic continues to have an unprecedented effect on daily life, many business owners are looking forward to the future and a return to normalcy. However, even when stay-at-home orders are lifted and nonessential businesses are allowed to resume operations, there’s a lot for organizations to consider before they reopen their doors. What’s more, many of these considerations are workplace-specific and could be more involved depending on the industry you operate in.

To protect their customers and employees alike, it’s important for organizations to do their due diligence before opening their business back up to the public following the COVID-19 pandemic.

Determining When to Reopen

While many essential businesses (e.g., hospitals, pharmacies, grocery stores and gas stations) have remained open during the COVID-19 pandemic, other operations deemed nonessential have shut down temporarily or changed the nature of their operations. Not only has this led to significant business disruptions, but, for many, it has critically impacted their bottom line.

However, we may be nearing a time when stay-at-home regulations are scaled back and all businesses are allowed to resume as normal. The question then is: How will business owners know it is acceptable to reopen? The following are some best practices to keep in mind:

  • Review guidance from state and local governments—The COVID-19 pandemic impacts states and regions in different ways. Just because a business is allowed to reopen in one region of the country doesn’t automatically mean your operations will be allowed to resume as well. As such, it’s critical to understand and review all relevant state and local orders to determine if and when your business is allowed to reopen.
  • Understand the risks—If and when the government allows all businesses to reopen, that doesn’t necessarily mean COVID-19 is no longer a threat to your operations. What’s more, some businesses may have greater COVID-19 exposures than others, underscoring the importance of performing a thorough risk assessment before reopening. Prior to conducting a risk assessment, it’s important to review guidance from the Occupational Safety and Health Administration (OSHA), state and local agencies, industry associations as well as your local health department. More information on conducting a risk assessment can be found below.

Again, before reopening, it’s critical to seek the expertise of legal, insurance and other professionals.

Conducting a Risk Assessment

Even after the government allows businesses to reopen, firms still need to determine if it makes sense to resume operations. Safely restarting your business won’t be as simple as unlocking the front door.

Before reopening, businesses should perform a risk assessment to determine what steps must be taken. While the complexity of risk assessments will differ from business to business, they typically involve the following steps:

  • Identifying the hazards—When it comes to COVID-19, businesses need to think critically about their exposures, particularly if an infected person entered their facilities. When identifying hazards, it’s a good idea to perform a walkthrough of the premises and consider high-risk areas (e.g., breakrooms and other areas where people may congregate). It’s also important to consider what tasks employees are performing and whether or not they are especially exposed to COVID-19 risks when performing their duties.
  • Deciding who may be harmed and how—Once you’ve identified hazards to your business, you need to determine what populations of your workforce are exposed to COVID-19 risks. When performing this evaluation, you will need to make note of high-risk individuals (e.g., staff members who meet with customers or individuals with preexisting medical conditions).
  • Assessing risks—Once you have identified the risks facing your business, you must analyze them to determine their potential consequences. For each risk facing your business, you’ll want to determine:
    • How likely is this particular risk to occur?
    • What are the ramifications should this risk occur?

When analyzing your risks, consider potential financial losses, compliance requirements, employee safety, business disruptions, reputational harm and other consequences.

  • Controlling risks—With a sense of what the threats to your business are, you can then consider ways to address them. There are a variety of methods businesses can use to manage their risks, including:
    • Risk avoidance—Risk avoidance is when a business eliminates certain hazards, activities and exposures from their operations altogether.
    • Risk control—Risk control involves preventive action.
    • Risk transfer—Risk transfer is when a business transfers their exposures to a third party.

For COVID-19, control measures could include cleaning protocols, work from home orders and mandated personal protective equipment (PPE) usage. Additional workplace considerations can be found below.

  • Monitoring the results—Risk management is an evolving, continuous process. Once you’ve implemented a risk management solution, you’ll want to monitor its effectiveness and reassess. Remember, COVID-19 risks facing your business can change over time.

Maintaining Workplace Safety Using OSHA and CDC Guidance

Once you conduct a risk assessment, you will need to act to control COVID-19 risks. Again, risks and the corrective steps that organizations take to address those risks will vary by business and industry.

Thankfully, there are a number of OSHA and Center for Disease Control and Prevention (CDC) workplace controls to consider if your risk assessment determines that COVID-19 poses a threat to your employees or customers. For instance, you should:

  • Implement administrative controls—Typically, administrative controls are changes in work policies or procedures that reduce or minimize an individual’s exposure to a hazard. An example of an administrative control for COVID-19 is establishing alternating days or extra shifts that reduce the total number of employees in a facility at a given time.
  • Utilize Personal Protective Equipment (PPE)— PPE is equipment worn by individuals to reduce exposure to a hazard, in this case, CVOID-19. Businesses should focus on training workers on and proper PPE best practices. Employees should understand how to properly put on, take off and care for PPE. Training material should be easy to understand and must be available in the appropriate language and literacy level for all workers.
  • Consider engineering controls—Engineering controls protect workers by removing hazardous conditions or by placing a barrier between the worker and the hazard. For COVID-19, engineering controls can include:
    • Installing high-efficiency air filters
    • Increasing ventilation rates in the work environment
    • Installing physical barriers, such as clear plastic sneeze guards
  • Be adaptable—You should be prepared to change your business practices if needed to maintain critical operations. This could involve identifying alternative suppliers, prioritizing existing customers or suspending portions of your operations.
  • Create a dialogue with vendors and partners—Talk with business partners about your response plans. Share best practices with other businesses in your communities, and especially those in your supply chain.
  • Encourage social distancing—Social distancing is the practice of deliberately increasing the physical space between people to avoid spreading illness. In terms of COVID-19, social distancing best practices for businesses can include:
    • Avoiding gatherings of 10 or more people
    • Instructing workers to maintain at least 6 feet of distance from other people
    • Hosting meetings virtually when possible
    • Limiting the number of people on the jobs site to essential personnel only
    • Encouraging or requiring staff to work from home when possible
    • Discouraging people from shaking hands
  • Manage the different risk levels of their employees—It’s important to be aware that some employees may be at higher risk for serious illness, such as older adults and those with chronic medical conditions. Consider minimizing face-to-face contact between these employees or assign work tasks that allow them to maintain a distance of 6 feet from other workers, customers and visitors.
  • Separate sick employees—Employees who appear to have symptoms (i.e., fever, cough or shortness of breath) upon arrival at work or who become sick during the day should immediately be separated from other employees, customers and visitors, and sent home. If an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19. The employer should instruct fellow employees about how to proceed based on the CDC Public Health Recommendations for Community-Related Exposure.
  • Support respiratory etiquette and hand hygiene—Businesses should encourage good hygiene to prevent the spread of COVD-19. This can involve:
    • Providing tissues and no-touch disposal receptacles
    • Providing soap and water in the workplace
    • Placing hand sanitizers in multiple locations to encourage hand hygiene
  • Perform routine environmental cleaning and disinfection—Businesses should regularly sanitize their facility to prevent the spread of COVID-19. Some best practices include:
    • Cleaning and disinfecting all frequently touched surfaces in the workplace, such as workstations, keyboards, telephones, handrails and doorknobs.
    • Discouraging workers from using other workers’ phones, desks, offices, or other tools and equipment, when possible. If necessary, clean and disinfect them before and after use.
    • Providing disposable wipes so that commonly used surfaces can be wiped down by employees before each use.

Continued Safety

While resuming operations following the COVID-19 pandemic may seem like a daunting task, businesses don’t have to go it alone. To help with this process, organizations can seek the help of their insurance professionals to determine what actions they need to take to ensure their business reopens smoothly. To learn more, contact Tooher Ferraris Insurance Group today.

Protection for Insurance Policyholders

Premium payments suspended while under COVID-19 financial stress –By Executive Order

We hope that this message finds you and your family safe and healthy during these difficult times.

The New York and Connecticut State Legislatures have been implementing emergency measures in an effort to protect insurance policyholders who have been hit with financial hardship because of the COVID-19 pandemic.

These are not waiver of payment or forgiveness programs. Policyholders will still be required to pay the premium at a later date.

Policyholders are encouraged to make direct contact with their insurance carrier to make specific payment arrangements.

State of Connecticut

As part of Executive Order No. 7S, no insurer may lapse, terminate or otherwise cancel a covered insurance policy due to nonpayment of premium from April 1, 2020, through Monday June 1, 2020.

The grace period applies to:

  • All entities licensed or regulated by the Connecticut Insurance Department—including admitted and non-admitted companies.
  • Policyholders unable to pay the interest or indebtedness on a premium.
  • Any insurance coverage in Connecticut, including life, health, auto, property and casualty.

Insurers must provide a 60-day grace period to insureds with individual insurance policies who have been:

  • laid off,
  • furloughed,
  • or fired from employment due to the COVID-19 pandemic.
  • This extends to individuals who have sustained a significant loss in revenue.

The insurer may require individuals to provide affidavits or other statements asserting that they need the grace period due to lost income because of the COVID-19 pandemic.

Insurers must provide a 60-day grace period to businesses that are group policyholders; have group insurance; and/or have property/casualty insurance:

  • that were required to close,
  • to significantly reduce operations,
  • or suffered significant revenue loss because of the COVID-19 pandemic.

The insurer may require businesses to provide affidavits or other statements confirming that they were required to close or significantly reduce their business operations or suffered a significant revenue loss due to the COVID-19 pandemic.

The grace period is not automatic. Policyholders must provide information regarding their COVID-19-related loss in revenue or income to insurers. Insurance carriers will be required to provide instructions on how policyholders should provide such information. The grace period only applies to cancellations or non-renewals due to the failure to pay premiums during the 60-day grace period; cancellations or non-renewals pursuant for other legally recognized reasons still permitted.

State of New York

Regulations they enacted include: the waiver of late fees; the prohibition on reporting negative data to credit reporting agencies; and the repayment of late premiums over a 12-month period.

Carriers that already have provided a policyholder with a 60-day grace period for March 2020 and April 2020 premiums will be deemed to have satisfied these requirements.

If you have been impacted by this pandemic, this means help may be available.

  • If you can demonstrate that you’re unable to make a timely premium payment due to financial hardship because of the COVID-19 pandemic, you may pay such premium over a 12-month period. 
  • If your policy is financed through a premium finance agency, they must provide a grace period before canceling your policy for the late payment of an installment if you can demonstrate financial hardship because of the COVID-19 pandemic.

This grace period will be 60 days for a property/casualty policy; 90 days for a life insurance policy.  You will be given a 12-month period to pay the missed installment, and the premium finance agency may not impose late fees or report you to any credit reporting agency or debt collector because of that installment.

You may prove hardship by submitting a written attestation to the insurance company or premium finance agency regarding your financial hardship resulting from the COVID-19 pandemic.  The full text of the relevant regulations can be read here: https://www.biginy.org/nysdfs.

If you have any questions about this or your policy, don’t hesitate to contact our team. We’re proud to continue helping you protect what matters most.

Be safe and well,

Principal

Protecting Workers From Coronavirus


As concerns about the COVID-19 continue to rise, many employers are left to wondering what they can do to protect their workforce. This Risk Insights will examine what coronavirus is, how it spreads, and what employers can do to protect their workforce.

What Is Coronavirus?

According to the World Health Organization (WHO), coronavirus is a family of viruses that cause illnesses ranging from the common cold to more severe diseases. Common signs of infection include headache, fever, cough, sore throat, runny nose and breathing difficulties. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death. Individuals who are elderly or pregnant, and anyone with preexisting medical conditions are at the greatest risk of becoming seriously ill from coronaviruses.   

How Does Coronavirus Spread?

Although the ongoing outbreak likely resulted from people who were exposed to infected animals, COVID-19 can spread between people through their respiratory secretions, especially when they cough or sneeze.

According the Centers for Disease Control and Prevention (CDC), the spread of COVID-19 from person-to-person most likely occurs among close contacts who are within about 6 feet of each other. It’s unclear at this time if a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose or eyes.

CDC Interim Guidance

In order to help employers plan and respond to COVID-19, the CDC has issued interim guidance. The CDC recommendations include:

  • Actively encourage sick employees to stay home. Employees who have symptoms of acute respiratory illness are recommended to stay home and not come to work until they are free of signs of a fever and any other symptoms of COVID-19 for at least 24 hours, without the use of fever-reducing or other symptom-altering medicines. What’s more, employees should be instructed to notify their supervisor and stay home if they are sick.
  • Separate sick employees. Employees who appear to have acute respiratory illness symptoms (e.g., cough or shortness of breath) upon arrival to work or become sick during the day should be separated from other employees and be sent home immediately. Sick employees should cover their nose and mouth with a tissue when coughing or sneezing.
  • Emphasize hand hygiene. Instruct employees to clean their hands often with an alcohol-based hand sanitizer that contains at least 60%-95% alcohol, or wash their hands with soap and water for at least 20 seconds. Soap and water should be used preferentially if hands are visibly dirty.
  • Perform routine environmental cleaning. Employers should routinely clean all frequently touched surfaces in the workplace, such as workstations, countertops and doorknobs.

Additional Best Practices

In addition to following the CDC’s interim guidance, employers should consider the following best practices to help prevent the spread of COVID-19:

  • Educate employees on the signs and symptoms of COVID-19 and the precautions that can be taken to minimize the risk of contracting the virus, without causing panic.
  • Appoint a single individual or department as the point of contact within your organization for employee questions about COVID-19.
  • Review safety programs and emergency action plans to ensure that they include infectious-disease protocols.
  • Implement travel guidelines and procedures for approving travel to and from China.

Stay Informed

Despite the current low level of risk for the average American employee, it is important to understand that the COVID-19 situation evolves and changes every day. Employers should closely monitor the CDC and WHO websites for the latest and most accurate information on COVID-19.

Admitted vs. Non-Amitted Insurance Carriers

There are times when the coverage you need is available exclusively from a non-admitted carrier. That being said, it is important to understand the difference between admitted and non-admitted carriers, as well as the advantages and disadvantages of each.

Admitted Carriers

An admitted carrier is one that follows guidelines set forth by the state, and is therefore licensed in the state or country in which the insured’s exposure is located. These guidelines vary from state to state, and some are more stringent than others. The obligation to follow state regulations and submit rates to a state’s department of insurance limits the flexibility of the insurer. If an admitted carrier becomes insolvent, the state guarantee fund steps in to pay out claims and premium remuneration where applicable.

Non-admitted Carriers

It is a common misconception that non-admitted is synonymous with non-licensed. In reality, non-admitted carriers do not have rates filed with the state and therefore are not as highly regulated, but this also means they are not protected by state funds. Because of this, they are sometimes able to offer better rates–these carriers can base price on specific exposures. Further, certain complex risks require the use of non-admitted carriers because the conventional insurance marketplace fails to provide adequate coverage. However, in the case of insolvency, the state will not pay the carrier’s outstanding claims and premium remuneration. 

Judging Financial Strength

Since with a non-admitted carrier you are not guaranteed payout from the state in the case of insolvency, as you are with an admitted carrier, one of the most important things to consider when purchasing coverage through a non-admitted carrier is its rating from firm A.M. Best, which rates a carrier on financial strength and size based on policyholder reserves. As long as you are aware of market conditions and are sure the carrier is reputable, buying coverage from non-admitted carriers can be beneficial: they often provide lower rates, absolute control over coverage terms and coverage unavailable through admitted carriers (including specialty risks, risks that are unusual or those that are unusually large).

Choosing Prudently

Non-admitted does not mean that an insurer is not regulated–many states do regulate non-admitted insurers. In fact, many non-admitted carriers are actually admitted carriers in other states. Non-admitted carriers intentionally opt-out of filing rates with the state not necessarily because they are unable to comply, but because doing so provides the advantages mentioned above. However, just because a carrier is admitted doesn’t mean it is financially solvent. Because of state restrictions, admitted carriers’ payouts may increase faster than permitted premium increases in certain classes of business, leading to financial instability. When making carrier decisions, consider whether the carrier is admitted or non-admitted, as well as if it is financially capable of paying a claim in the event of an accident.

password security

Coverage In Action: Cyber Liability

As technology becomes increasingly important for successful business operations, the value of a strong cyber liability insurance policy continues to grow. The continued rise in the amount of information stored and transferred electronically has resulted in a remarkable increase in the potential exposures facing businesses.

In an age where a stolen laptop or data breach can instantly compromise the personal data of thousands of customers, protecting your business from cyber liability is just as important as some of the more traditional exposures businesses account for in their commercial general liability policies.

Claims Scenario: Outsourcing Gone Wrong

The company: A national construction company that outsources some of its cyber security protections

The challenge: A construction firm partnered with a third-party cloud service provider in order to store customer information. While this service helped the company save on server costs, the third-party firm suffered a data breach.

As a result, the construction firm had to notify 10,000 of its customers and was forced to pay nearly $200,000 in incident investigation costs. The incident was made worse by the fact that the firm did not have a document retention procedure, which complicated the incident response process.

Cyber liability insurance in action: Following a data breach or other cyber event, the right policy can help organizations recoup a number of key costs. Specifically, cyber liability policies often cover investigation and forensics expenses—expenses that can easily bankrupt smaller firms who forgo coverage.

What’s more, when third parties are involved, managing litigation concerns can be a challenge. By using cyber liability insurance, organizations have access to legal professionals well-versed in cyber lawsuits and response.

Benefits of Cyber Liability Insurance

  • Data breach coverage—In the event of a breach, organizations are required by law to notify affected parties. This can add to overall data breach costs, particularly as they relate to security fixes, identity theft protection for those impacted by the breach and protection from possible legal action. Cyber liability policies include coverage for these exposures, thus safeguarding your data from cyber criminals.
  • Business interruption loss reimbursement—A cyber attack can lead to an IT failure that disrupts business operations, costing your organization both time and money. Cyber liability policies may cover your loss of income during these interruptions. What’s more, increased costs to your business operations in the aftermath of a cyber attack may also be covered.
  • Cyber extortion defence—Ransomware and similar malicious software are designed to steal and withhold key data from organizations until a steep fee is paid. As these types of attacks increase in frequency and severity, it’s critical that organizations seek cyber liability insurance, which can help recoup losses related to cyber extortion.
  • Legal support—In the wake of a cyber incident, businesses often seek legal assistance. This assistance can be costly. Cyber liability insurance can help businesses afford proper legal work following a cyber attack.

Contact Tooher-Ferraris Insurance Group today to learn more about your unique exposures and options for Cyber Liability Coverage. Using our industry specific cyber exposure scorecards we can customize a plan for your unique needs.

Business |Personal | Risk Management

Phone: 800-899-0093 | www.toofer.com | info@toofer.com

Guide to Directors and Officers Insurance

Director & Officer Liability (D&O) Underwriting Fundamentals

Directors and officers liability (D&O) insurance is a fundamental component of any company’s risk management program. A lack of D&O insurance may dissuade talented individuals from seeking an executive position at your company, as they don’t want to put their personal assets at risk in the event of a lawsuit.

As a savvy business owner looking to protect your bottom line, how do you weigh the cost of insurance to protect your senior leadership with the potential risk of a lawsuit? As regulatory investigations and defense expenses increase, prices for D&O insurance have gone up as well. Corporate indemnification provides the first line of liability protection; but certain circumstances—most notably, if the company goes bankrupt—necessitates that additional protection is offered to directors and officers.

A variety of factors determine the price of a company’s D&O insurance. Some low-risk companies pay pennies on the dollar; others pay a lot more, but they understand it’s a lot less than the expenses they’d incur in a lawsuit. Recognizing the cost drivers of D&O insurance—a company’s exposures, legislation and trends in D&O lawsuits—can help you decide what coverage your company needs to mitigate its unique exposures.

Company Characteristics and Exposures

Public, private and nonprofit corporations with assets of all sizes purchase D&O liability insurance. To determine the cost of premiums and the limits of coverage, insurers review several facets of the company’s structure and price D&O insurance accordingly. Some of these attributes include the following:

  1. Is the company mature or young and developing? Companies with less experience and a shorter history of proven effective management can be a riskier policy to underwrite than well-developed companies that have experienced directors and officers.
  2. What industry is the company involved in?Operating in certain industries, such as investment banking and securities, may expose their executive management to more risks than those for the board members of a small nonprofit.
  3. Is the company financially stable? Insurers consider the amount of debt a company has. Corporate indemnification usually protects directors’ and officers’ personal assets. However, if the company’s finances are unstable, they have an increased chance of becoming insolvent during a lawsuit.
  4. Is the company planning on going public soon? Initial public offerings, the most common way to go public, increases the exposures for a private company. Issues, such as a lack of disclosure or if the company’s performance fails to meet expectations, are significant risks for directors and officers during this process.
  5. Does your company have employees? From nonprofits to large, publicly held companies, employment-related claims are the primary cause of lawsuits against an organization’s directors and officers.
  6. Does the company operate in foreign markets? Conducting business internationally can complicate the D&O insurance needed. For example, in addition to domestic laws, European countries have their own set of regulations to follow.
  7. What is the company’s history of past litigation? Insurers will analyze a company’s history of
What Type of D&O Coverage Do You Need?
Your organization’s unique attributes and risks will determine
the extent of D&O insurance coverage you need. The type of
coverage affects the cost, and it’s important to understand the
different types of D&O insurance to determine what covers your
risks. Policy options include

Side A: This coverage protects directors and officers when indemnification is not available. For example, if the company goes bankrupt during a lawsuit, this coverage would protect directors’ and officers’ personal assets.

Side B: This coverage reimburses a company’s indemnification
obligations.

Side C: This coverage protects the company itself in the case of a
lawsuit.

Employment Practices Liability (EPL): This coverage protects
directors and officers against wrongful termination,
discrimination (age, sex, race, disability, etc.) or sexual harassment suits from current, prospective or former employees.

Fiduciary Liability: This coverage protects the fiduciaries of
employee benefit plans from ERISA lawsuits, previous lawsuits
and any adverse business developments and executive management changes.

Current and New Legislation

Securities Exchange Commission (SEC) regulations continue to impact the cost of D&O insurance. Publicly held companies especially must be cognizant and keep current on SEC disclosure obligations and provisions in the Sarbanes-Oxley (SOX) Act of 2002, which was enacted in response to the corporate scandals of Enron, Tyco, WorldCom and others.

Also, recent changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act have caused a spike in whistleblower reporting, bringing to light many D&O claims and increasing the need for D&O insurance. The new whistleblower provision in the Act now gives whistleblowers a “bounty,” or monetary compensation, if the lawsuit results in more than $1 million in monetary sanctions. Given this new incentive, there has already been an increase in the number of whistleblowers that have emerged since the Act added the provisions in early 2011.

Trends in D&O Lawsuits

Even after a thorough assessment of a company’s risks, D&O insurance continues to be a high-severity product, as carriers are often hit unexpectedly with catastrophic claims. It’s no surprise that as litigation increases, the price of D&O insurance increases as well. In addition, as the litigation process grows lengthier and if multiple lawsuits erupt from a single transaction, a company can quickly exhaust its primary layer of D&O coverage.

Some types of lawsuits occur less often, but result in catastrophic losses. Other types result in smaller payouts, but occur more frequently. Nonetheless, defense expenses can cost millions of dollars, even if the director or officer is not found liable. Some of the types of lawsuits that affect directors and officers include the following:

  • Breach of fiduciary duty lawsuits
  • Employee Retirement Income Security Act (ERISA) lawsuits
  • Employment-related lawsuits
  • Mergers and acquisitions (M&A) and “merger objection” lawsuits
  • Securities class-action lawsuits
  • Shareholder derivative suits

Within the last few years, there has been an increase in M&A lawsuits. In 2014, there were more than 600 lawsuits regarding M&A. Some M&A cases involve multiple lawsuits and a lengthy litigation process, which can deeply cut into a company’s primary D&O policy.

Know What Your Policy Covers

While many companies usually focus on the cost of their D&O policy, understanding the scope of the policy is even more critical. Most D&O policies are renewed yearly, and the terms and conditions can change. Read through your policy carefully. Be aware of the following:

  • Look at the limits of your liability. Are they enough to cover your exposures? Companies with a lot of risk exposures usually find that they need more than just the primary coverage, and purchase excess insurance as well.
  • Be aware of exclusions; most D&O policies do not cover claims that arise from fraudulent or criminal acts.
  • For some insurance carriers, Employment Practices Liability (EPL) insurance and Fiduciary Liability insurance are policies that are purchased separately from primary D&O insurance. Don’t assume they are automatically included in your D&O policy.