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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 Damage Could Total Billions

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Experts now project damage figures could be in the billions of dollars as a result of last week’s Hurricane Laura, the category 4 storm that hit several Caribbean nations as well as Louisiana and Texas in the United States.

Laura was the strongest hurricane to hit Louisiana since 1856, but the damage may end up costing less than previous storms because it did not hit heavily populated cities. In 2005, Hurricane Katrina caused $160 billion in damages, while 2017’s Hurricane Harvey cost $125 billion.

Karen Clarke & Company estimated on August 28 that the damage will total almost $9 billion in the United States, and $200 million in the Caribbean, where it hit Antigua, Cuba, the Dominican Republic and Hispaniola.

CoreLogic put the damage in Louisiana at $8 billion to $12 billion, and estimated that the damage in Texas would total less than $500 million. Moody’s Analytics also provided a preliminary damage estimate of between $4 billion and $7 billion.

According to Louisiana news site The Advocate, State Farm, which has around 278,000 policies in Louisiana, said it had received more than 7,000 claims as of last week. The National Flood Service said Friday that FEMA had received nearly 100 claims for damage caused by Laura.

On Thursday, Louisiana officials announced that over 230,000 residents still do not have power, and 175,000 have water outages. As of September 3, 21 Louisiana residents have died related to the storm, with the Louisiana Department of Health reporting that at least 8 deaths were from carbon monoxide poisoning related to improper generator use.

In a new report, Hurricane Season: More Than Just Wind and Water, the Insurance Information Institute said that losses from hurricanes have risen sharply over the past 16 years, growing quicker than inflation by almost 7%. Citing Aon director and meteorologist Dan Hartung, the III reported that “2017, 2018 and 2019 represent the largest back-to-back-to-back insured property loss years in U.S. history.”

The Institute blamed these rising costs on populations moving to more hurricane-prone areas like Florida and Texas, and building bigger, more expensive houses in those areas. When these houses—and the expensive property in them—are damaged, the insurance payouts are higher.

Additionally, hurricanes have brought significantly more water inland as climate change intensifies, the report noted. These factors have all caused more flooding and more insured property damage. The Institute said that rising hurricane losses, plus claims related to the COVID-19 pandemic, will likely translate into insurance rates increasing in the near future.

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

Planning and Risk Assessment for Returning to Work From COVID-19 Closures

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As businesses reopen and begin having their employees return to work, navigating the impacts of COVID-19 will undoubtedly be a challenge. Not only does keeping employees and customers safe take on new meaning, but sorting through rapidly changing guidelines can be overwhelming at best.

Adding to the complexity of returning to work after coronavirus-related closures, the Occupational Safety and Health Administration (OSHA), the Centers for Disease Control and Prevention (CDC) and various jurisdictional health departments are all providing guidance. To best keep employees safe and make sure businesses are heading down the right path of compliance in this new era, employers should focus on planning and structure reopening into four phases: 1. identify organizational responsibilities, 2. assess risk, 3. identify the controls needed to return safely, and 4. implement.

1. Identify Organizational Responsibilities

OSHA’s Infection Disease Preparedness and Response Plan (IDPRP) has presented a helpful approach for a range of organizations across the country. The plan helps emphasize and communicate basic infection prevention measures and establishes policies and practices to reduce the risk of disease transmission in the workplace. It also helps employers develop procedures for prompt identification and isolation of potentially infectious individuals, along with implementing safe work practices and workplace controls, such as engineering and administrative controls.

To start, identify the people within the organization who will lead the return-to-work effort. This team will provide daily updates on plan implementation, review company sick leave policies and procure and distribute Personal Protective Equipment (PPE).

During this phase, review your organization’s policies and procedures to ensure they are not creating obstacles for social distancing or staying at home when sick. Sick leave, quarantine policies and pay continuation should all be modified as necessary.

2. Assess Employee Risk Exposure to COVID-19

With a team in place, it’s time to dig deep into individual roles within the organization to understand the risks associated with various work sites and job tasks. The IDPRP helps organizations identify and quantify risks associated with infectious disease and helps to evaluate an employee’s exposure to COVID-19.

When evaluating the individual roles, identify the position, task and potential exposure based on criteria laid out in four exposure levels:

  • Low risk: Jobs that do not require contact with people known to be or suspected of being infected with COVID 19. Workers in this category have minimal occupational contact with the public and other coworkers. Office workers and telecommuters are examples of low-risk roles.
  • Medium risk: Jobs that require frequent or close contact with people who may be infected, but who are not known to have or suspected of having COVID-19. Higher-volume retail workers, restaurant servers and teachers are examples of medium-risk roles.
  • High risk: Jobs with a high potential for exposure to people known or suspected to be infected with COVID-19. Healthcare support personnel, janitorial personnel in healthcare and medical transport personnel are examples of high-risk roles.
  • Very high risk: Jobs with a very high potential for exposure to people or samples with known or suspected COVID-19 infection during specific medical, postmortem or laboratory procedures. Laboratory workers testing for COVID-19, pulmonary therapists and morticians performing autopsies are examples of very high-risk roles.
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3. Identify the Controls Needed to Return Safely

After completing a risk assessment for each role, identify specific PPE and administrative and engineering controls to reduce employee exposures. Clerical work, for example, is considered low risk and controls include social distancing and awareness training. A task such as stocking shelves where an employee has moderate exposure to others is considered a medium risk and nitrile gloves, cotton masks and other PPE are recommended. For tasks with high or very high exposure such as healthcare delivery staff, controls include nitrile gloves, facemasks, N-95 or better respirator, protective gown, booties, and head cover.

4. Put the Plan in Action

There are many organizational actions that can be implemented to further prepare to support and enforce the mitigation controls in place. Engineering controls to consider include installing high-efficiency air filters in HVAC systems, increasing a facilities dilution ventilation rate or installing physical barriers to control exposure. Post signs detailing cleaning and disinfecting procedures and social distancing requirements.

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Activate temperature stations and enforce an elevator policy.

For a successful return to work, it is essential to communicate and train employees regarding protections in the workplace. A communication plan should be identified during the organizational return-to-work planning phase, along with employee, supervisor and manager training. The workforce must be well-versed in recognizing symptoms, and everyone should know how to report possible exposure and what mitigation controls specific roles should be using. Your workers compensation carrier should be able to walk you through this process and help get you back to work. Tools and resources are also available on the OSHA and CDC websites.

Organizations that had clear pandemic response plans in place ahead of COVID-19 have had better access to PPE, quicker response times to daily changes in recommended controls, and more consistent ability to address employee concerns. If an employer does not currently have a response plan in place, however, it is never too late to get started. Preparing to return to work is a perfect time to establish the framework to make sure a business is not only ready to work during COVID-19, but also ready for unforeseen disasters in the future.