How can insurers best respond to COVID-19?

4/1/2020
How can insurers best respond to COVID-19?

In response to the novel coronavirus disease 2019 (COVID-19) pandemic, insurance companies must react to operational, business continuity, and financial risks quickly and decisively. 

The New York Department of Financial Services (NYDFS), among other state regulators, has issued state-specific guidance requiring insurers to evaluate operational and financial risks arising from the outbreak of COVID-19.

The NYDFS circular requests that each insurer provide a description of its plans of preparedness to manage the risk of disruption to its operations and the financial risk arising from COVID-19. Each NYDFS-regulated insurance company is required to submit a response to the circular describing its plans of preparedness by April 10, 2020.

In addition to New York, several other states are asking insurers to confirm similar business continuity information. While this list is likely to expand, regulators from the following states have requested responses: Alabama, Connecticut, Georgia, Missouri, and West Virginia. Nearly all state regulators are asking insurers to evaluate business preparedness plans internally in response to the pandemic, even if a written response is not required.

Regulators are largely focused on understanding COVID-19 readiness for each insurer. To protect policyholders, regulators need to understand business continuity plans as well as when an insurer might no longer be able to provide insurance services to policyholders. For health insurance companies, regulators are also focused on monitoring compliance with policy coverage related to COVID-19. 

Business continuity plan consideration

Preventive measures tailored to the entity’s specific profile and operations to mitigate the risk of operational disruption should include: 

  • Assessing the impact on consumers and vendors 
  • Documenting a strategy that addresses the impact of the outbreak in stages so that an entity’s efforts can be appropriately scaled
  • Identifying all facilities, systems, policies, and procedures necessary to continue critical operations and services if members of the staff are unavailable or working remotely
  • Implementing employee protection strategies to safeguard and sustain an adequate workforce
  • Determining the preparedness of critical third-party service providers and suppliers
  • Developing a communication plan   
  • Testing the plan to make sure that the policies, processes, and procedures are effective
  • Establishing governance and oversight 
 

While an effective business continuity plan will be specific to the unique operations and risks of each company, the following elements should be present:  

Adaptability. The pandemic’s impact on the economy changes on a near-daily basis, and the rapid dissemination of new data will continue to affect preparedness strategy and decisions. 

Responsiveness. Maintaining internal and external communication channels is critical. A business continuity plan must address how communication with employees, policyholders, vendors, agents, regulators, and other third parties will be managed. 

Strategic preparedness. A business continuity plan must address infrastructure requirements in relation to potential business interruptions. For example, in terms of technology requirements to transition to a remote work environment, other significant questions exist beyond technology needs. What criteria are used to determine an essential versus nonessential process or job function? 

Decisiveness. Establishing policies, procedures, and governance and monitoring mechanisms helps management to act nimbly and with authority. These policies and procedures will serve as a road map to keep key decision-makers focused on more critical and unforeseen risks rather than developing protocols in the midst of crisis. 

Need a hand? We’re here to help. Crowe has the expertise to help your organization efficiently develop a business continuity plan. Need help preparing a COVID-19 readiness response for a state regulator? We can assist with that, too.  

 

We’re here for you. Remote delivery and collaboration.

People need to work differently right now. And that’s okay. We can all rise to the occasion and get better at virtual collaboration.

By utilizing existing tools, modern technologies, and good old-fashioned work ethic – we will continue to thrive. Travel bans and social distancing don’t mean your projects have to be disrupted. We have the tools. And we’ve done this before. We’re helping all our clients do virtual well. 

Let’s get work done – together 

Want more insights on addressing coronavirus-related challenges? 
Go to the Crowe COVID-19 resource center for more analysis and updates.