Casualty writers trying to be flexible over Covid-19: AmWINS

Casualty underwriters “are striving to be flexible and fair” in their treatment of clients and their coverages relating to Covid-19 but exclusions are also still being added in many sectors, according to a new study from AmWINS.

The wholesale broking giant reported that “most carriers are striving to be flexible and fair”, adding that underwriters are also willing to give concessions to clients. However, few carriers are willing to make blanket statements about the measures they are willing to take to provide relief to insureds.

“Most carriers have made commitments to extend payment terms, but exposure base reductions and policy extensions are being handled on a case-by-case basis,” the broker said.

“The most common concession carriers have made thus far is endorsing policies from a minimum premium perspective, which would potentially provide a return of premium to the insured upon policy expiration.’’

The analysis gave details of the response by casualty segment.

Construction

For the construction segment, AmWINS reported carriers are making few changes to terms and conditions and the market is as close to business as usual as can be expected.

“Some are issuing communicable disease exclusions, and few are saying ‘yes’ to extensions,” AmWINS said.

“However, many markets have stepped up to the plate to help insureds during this time, including offering a suspension of operations endorsement and a resumption of operations endorsement, particularly on project policies.”

Construction companies themselves are dealing with projects being greatly restricted everywhere and essentially shut down in some areas. Contractors have been slashing payroll and revenue estimates for workers compensation and general liability policies.

“We’ve seen clients cutting exposure estimates anywhere from 25 to 50 percent,” said Jett Abramson, AmWINS executive vice president. “And by and large, carriers have been willing to accommodate.”

Real estate

In the real estate segment, AmWINS noted that most general liability policies already contained a communicable disease exclusion but that some excess markets are now adding exclusions to their policies.

The broker said real estate insureds are continuing to see no let-up from insurers pursuing rate increases. “The rate increases were occurring well before Covid-19, but the combination of the two is creating an even more challenging landscape,’ it said.

Manufacturing

In the manufacturing sector, operations that are deemed non-essential are facing great uncertainty. This is causing them to request to reduce sales estimates.

“Some carriers have been willing to do so, and many are also offering lower minimum deposit premiums to help companies get through the cash-flow crunch and in expectation of lower audited sales at policy expiration,” AmWINS said.

AmWINS senior vice president TJ Collins commented that some insureds have been forced to choose between paying their operational bills, employees or insurance premiums.

“With the lack of contractually required insurance limits in certain industries, coverage is often the first to go. We have seen multiple policies cancelled mid-term,” he said.

Manufacturing underwriters are raising concerns about potential products liability claims resulting from defects and rushed production, as some manufacturers retool plants to create critical supplies. Carriers are asking additional questions about insureds’ experience making these types of products and about quality controls.

“Many go-to carriers in the manufacturing space are not willing to provide coverage solutions because of product quality concerns,” Collins said.

Product recall

In the product recall sector, AmWINS said carriers are making renewals as smooth as possible in the circumstances, but some markets are taking a firm position regarding Covid-19.

“Product recall markets in London have started to add mandatory Covid-19 exclusions on all new business and renewals,” said Robert Balogh, AmWINS senior vice president. “These mandatory exclusions have not yet transitioned over to domestic markets.”

Matt Carpenter, AmWINS executive vice president, added that product recall submission flow has remained steady so far but new business is expected to diminish in the near future as a result of Covid-19.

“Underwriters are already feeling effects from this change and are aggressively seeking new opportunities, which perpetuates a slightly softening market,” Carpenter said.

Transportation

In the transportation segment, primary auto markets have been more flexible around removing units from policies on a temporarily out-of-service status without providing the normally required documentation, with some also willing to lower minimums and deposits on policies.

“Some excess carriers are also following the lead of primary carriers in allowing these deletions,” said AmWINS.

Many transportation clients, and therefore their insurers, are reporting their best month for claims ever because of mostly empty roads.

Energy

In the energy segment, there has been less impact from Covid-19 than other industries but some carriers are introducing an endorsement more specific to communicable diseases.

“We are seeing some attempting to add a catch-all phrase for communicable disease on policies effective 1 May,” says Heath Cunningham, AmWINS executive vice president. “Once the marketplace starts seeing this language being accepted, everybody is going to jump on the bandwagon.”