Insured in uncertain times Some items to keep an eye on with commercial insurance

By Andrew Weeks

The coronavirus pandemic has certainly impacted businesses across the country, including those that work in insurance, creating some new trends in the industry.

In interviews with Prairie Business, several insurance professionals in the region highlighted some of the trends they are noticing currently and what owners should keep an eye on as they prepare to move into a new year.

Commercial property insurance

Something that seems to be trending in the commercial property market is increased rates. That market “has been much more difficult,” said Kevin Bowen, marketing director for Vaaler Insurance. “Rates have gone up and seem to be continuing that way.”

Bowen, located in the company’s Bismarck office, said rates have increased by as much as 10% throughout the year on various lines of business.

The increase is driven, in part, because of business losses across the country caused by natural disasters. Mass riots, in which many businesses were vandalized this past summer, also contributed to higher rates. “The property losses in particular. I don’t know by how much,” Bowen said, “but I have heard from carriers that riots have contributed to property rates increasing.”

That might be difficult for some people to understand. Business owners may question how hurricanes in Florida or wildfires in California affect their insurance premiums in North Dakota. It basically is a ripple-effect scenario: When natural disasters and mass riots affect one part of the country, the waves in insurance are felt across the nation.

“It really comes down to the basics, the fundamentals of how insurance works. Essentially, it’s a large group of individuals and businesses sharing risk. For the companies that write insurance, those that we write with, that includes most of the states throughout the country and so that in turn impacts everybody’s insurance rates on a smaller scale.”

One question many businesses have asked, according to the insurance firms that Prairie Business interviewed, is if policies cover business loss related to COVID-19.

The short answer is, unfortunately, no.

The industry is threatened with litigation to retroactively alter insurance policies to cover the economic cost of the pandemic and widespread business closures, according to Marilyn Ternes, vice president of the Bismarck office of EMC Insurance Companies.

“However,” she said, “the industry’s policies generally exclude virus and bacteria exposures, and therefore insurers did not collect premium to cover these types of losses.”

She said requiring them to do so retroactively would be severely detrimental to the stability of the industry and all insurers. Instead, firms continue to help businesses in other ways during the pandemic.

“Insurers have placed great emphasis on serving and supporting customers, agents, employees and communities during the crisis,” she said, “through means such as return of premiums, payment term flexibility, donations to nonprofit organizations, no-layoff pledges, work-from-home solutions to protect employees and prevent community spread, and more.”

Some positive news for pandemic coverage might be on the horizon, according to Tom Tvedt and Steve Ness of Moorhead Insurance, but if so it’d be a while before it is realized and won’t do much for those businesses impacted now.

“We’re seeing some legislation being put forth to see if there would be some type of coverage available under commercial business policies,” Tvedt said. “Right now there is not.”

Ness explained that if civil authority prohibits access to an insurance location because of direct physical damage, under a covered cause of loss, the civil authority coverage could be triggered. “However,” he said, “viruses and bacteria are excluded causes of loss in most policies industry wide.” continued on page 14

He and Tvedt operate a small business, as do many of the clients they work with, and have empathy for what many are experiencing right now. They are hopeful that items will be put in place to cover future losses related to viruses. As they explained it, after the terrorist attacks in 2001 legislation was developed to include acts of terrorism in some insurance policies. Because COVID-19 has affected so many businesses, future policies may cover pandemics.

“A policyholder for a small business could then say, well, I’d like to purchase pandemic coverage,” Tvedt said. “It’d be exactly like what they did when we had 9/11.