Five Action Steps to Update Your Risk Management Program for a Post-Pandemic World

Forensic & Litigation Consulting | Insurance

May 18, 2020

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COVID-19 and virus containment efforts have altered insurance exposures and have created challenges to accurately estimate insurance claim liabilities. This article presents emerging insurance issues associated with COVID-19 and action steps for companies with self-insured plans and captives to consider.

Companies that self-insure or own a captive insurance company need to proactively take steps to consider the impact of COVID-19 on their risk retention programs and financial statements.

Workers in healthcare and other essential industries are at increased risk of contracting the virus with implications for retained health insurance and workers’ compensation claims, among others. Shelter-in-place orders have upended industries including transportation, hospitality, service, and retail, dramatically altering insurance exposures.

CEOs, CFOs, and controllers will need to carefully consider how the coronavirus will impact claims activity, reserve liabilities, and corporate appetite for risk.

This article covers risks associated with health, worker’s compensation, and other types of insurance coverage, such as business interruption, liability, auto and medical malpractice. Self-insured plans need to maintain “normal” day-to-day operations while responding to the radically changing business environment and the immediate threat COVID-19 poses to pre-pandemic risk management programs.

We recommend that companies take the following actions as they re-examine their risk-retention programs:

  • Formulate a COVID-Specific Risk Management Response
  • Assess COVID-19 Claims Potential
  • Adjust Exposures for Staffing and Business Changes
  • Update Actuarial Reserve Liabilities and Projections
  • Re-Examine Risk Retention Levels

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