2020 has changed everything.  We would be hard-pressed to find an industry that has not been met with significant challenges over the past nine months.  Insurance is no exception. Forget about the changes to your daily routine; this mass illness has brought sweeping changes to our country and the businesses that drive our economy.

As you rethink the way you and your coworkers must adapt to the so-called “new normal”, I would like to suggest a few items for you to consider relating to managing and better understanding your book of business.

It probably bears mentioning that my perspective does not come from either the production or operations side of commercial insurance.  I have spent the past 35 years working within the distinct disciplines of premium audit and loss control.  As such, I and my staff, deal with business policyholders on a daily basis.  Our job is to understand what makes them tick and to present our findings in a way that provides actionable information.

The first noteworthy of mention is that the business landscape has changed forever.  Many entrepreneurs are asea, trying to understand how today’s reality might differ from that of 6 to 12 months from now.  Sadly, some are making decisions about what the future, if any, might hold for them and their employees. Last week we came in contact with a 70-year-old shop owner, in a major US city, whose business had recently been destroyed twice by rioting.  He has taken the choice not to continue.  I suspect there will be more like him.

Secondly, there are many businesses, namely contractors, who will quickly adapt to the new business landscape.  As always happens in an economic downturn, a policyholder who started the year doing construction work may have to fall back on doing demolition or some other trade that was unthinkable when his policy was written earlier in the year.  While his payroll might be down considerably, his exposure to risk might have changed for the worse as well.  It is a factor that many in our industry overlook.

Finally, rating organizations are scrambling to account for pandemic shutdowns.  Many businesses continued to pay employees for a time, even while these same employees were furloughed from work.  In instances where “payroll” is the premium basis, accommodations must be made to account for this.  It seems, from my perspective, that most states are getting a handle on this from the standpoint of Worker’s Comp.  The response by carriers on the casualty side has been less rapid.  In any case, it’s worthwhile taking the time to understand how various companies are addressing the issue and making sure this information is being communicated appropriately.

Insurance providers are in a vulnerable position right now.  Understanding the big picture will be key.  Ignorance is not, nor has it ever been, bliss.  We need to make sure that while we are righting our own boats, we don’t ignore the reason we all get up and go to work in the first place.

Myles Bancroft is COO of Legacy National Audit Bureau, a subsidiary of Cal Inspection Bureau, Inc.   Myles has spent the past 34 years in the commercial insurance industry, working with a large, national audit company as well as founding two specialty premium audit firms.  The most recent, Legacy National Audit Bureau, is widely recognized as an industry leader in premium audit quality and customer service.

For comments: myles@legacynationalaudit.com

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