Regions Bank Treasury Management sends out information on Emerging COVID-19 Scams

Be aware of Emerging Covid-19 Scams
Author credit: Jeffrey Taylor of Regions Treasury Management Products and Services

Several government agencies have issued a bulletin warning of a new type of COVID-19 scam. Along with the previously reported scams involving personal protective equipment (PPE), COVID-19 testing, and economic stimulus payments, fraudsters are now leveraging the availability of the COVID-19 vaccine. According to the bulletin, victims are being coerced to make an out-of-pocket payment for the vaccine and provide personally identifiable information with a false promise to move their name up on the list of vaccine recipients.

The FBI warns of the following potential indicators of fraudulent activity:

  • Advertisements or offers for early access to the vaccine upon payment of a deposit or fee
  • Requests asking for out-of-pocket payment to obtain the vaccine or be added to the COVID-19 vaccine waiting list
  • Offers to provide additional medical testing or procedures when obtaining the vaccine
  • Marketers offering to sell and/or ship doses of a vaccine, domestically or internationally, in exchange for payment of a deposit or fee
  • Unsolicited emails, telephone calls, or personal contact from someone claiming to be from a medical office, insurance company or COVID-19 vaccine center requesting personal and/or medical information to determine eligibility to participate in clinical vaccine trials or obtain the vaccine
  • Claims of FDA approval for a vaccine that cannot be verified
  • Advertisements for vaccines through social media platforms, email, telephone calls, websites or unsolicited/unknown sources
  • Unsolicited emails, telephone calls, or personal contact from someone claiming to be a government official requiring you to receive a COVID-19 vaccine


Tips to avoid COVID-19 vaccine-related fraud:

  • Consult your state’s health department website for up-to-date information about authorized vaccine distribution channels
  • Check the FDA’s website (fda.gov) for current information about vaccine emergency use authorizations
  • Consult your primary care physician before undergoing any vaccination
  • Don’t share your personal or health information with anyone other than known and trusted medical professionals
  • Check your medical bills and insurance explanation of benefits (EOBs) for any suspicious claims and promptly report such information to your health insurance provider
  • Follow guidance from the CDC and other trusted medical professionals


General techniques for online/cyber fraud prevention:

  • Verify the spelling of web addresses, websites, and email addresses that look trustworthy but may be imitations of legitimate websites
  • Ensure operating systems and applications are updated to the most current versions
  • Update anti-malware and anti-virus software and conduct regular network scans
  • Do not enable macros on documents downloaded from an email unless necessary and only after ensuring the file is not malicious
  • Do not communicate with or open emails, attachments, or links from unknown individuals
  • Never provide personal information of any sort via email. Be aware that many emails requesting your personal information may appear to be legitimate
  • Use strong two-factor authentication, using biometrics, hardware tokens, or authentication apps
  • Disable or remove unnecessary software applications

If you believe you are a victim of a COVID-19 scam, please call Regions Client Services immediately at 1-800-787-3905, and report it to the FBI at www.ic3.gov; wwwtips.fbi.gov; or 1-800-CALL-FBI.

Want more information, or have questions?
For more helpful practices regarding fraud prevention, please visit regions.com/stopfraud and www.regions.com/fraud-prevention.

SBA Issues New PPP Update

On January 6, 2021, the SBA (Small Business Administration) issued guidance on PPP (Paycheck Protection Program) by way of 2 interim final rules (IFR). The SBA will use the consolidated guidance of PP1 and these 2 IFRs to apply to PPP2. Withum, tax and assurance advisors, has put together a summary of the guidance to help us understand. Check out the full article here.

The biggest take-away for me is that borrowers under PPP1 are eligible for loans under PPP2; see article above for eligibility details of visit that SBA website. If you are interested in applying for the second round , the SBA has provided a list of Participating Lenders. Round 2 will be handled similarly through private lenders for management of the loans as well as the forgiveness application process. If you currently have a banking relationship contact your representative for guidance, as I learned with PPP1, each institution handles the program processing differently.

For more detail on the interim rulings you can check out the SBA webpage for PPP here.

Welcome to 2021, I will say it was nice to see that a second round of assistance is being offered up for small business. These days we always need to remember to look for the silver lining, be thankful for what we have, and be strategic in planning for our needs.

COVID-19 Relief Bill

Our friends at NAPEO are always keeping us up to date with pertinent information impacting PEOs and Small Businesses. They released the following yesterday related to the COVID-19 Relief Bill.

COVID-19 Relief Bill: What It Means for PEOs & Small Business

Yesterday, the House passed an omnibus spending bill that included $1.4 trillion to fund the federal government and $900 billion of additional COVID relief by a vote of 399-53. The Senate then passed the legislation by a vote of 92-6. The bill now heads to the White House, where President Trump is expected to sign it.

Tax Provisions

The omnibus spending bill – which is almost 5,600 pages long – contained many tax provisions that impact PEOs. Randy Hardock and Courtney Zinter of Davis & Harman (NAPEO’s outside tax counsel) have prepared a document containing the details of these provisions and how they apply to PEOs.

Specific tax provisions of interest to PEOs include:

  • Paid Sick and Family Leave Credits
    • Extends the paid sick and family leave credits against employment taxes from the Families First Coronavirus Response Act (FFCRA) for three additional months to March 31, 2021.
    • The bill does not extend the FFCRA’s mandate to provide paid sick leave or paid family and medical leave beyond December 31, 2020.
  • Changes to the Employee Retention Tax Credit (ERTC)
    • Repeals the provision denying the ERTC to employers receiving a PPP loan. Instead, mechanisms would be created to prevent the same wages from being used for both PPP loan forgiveness and the ERTC.
    • Extends the ERTC to apply to wages paid before July 1, 2021 (instead of January 1, 2021).
    • Increases the credit percentage from 50 percent to 70 percent of applicable wages.
    • Increases the per-employee limitation on applicable wages from $10,000 total to $10,000 per calendar quarter. In combination with the increased credit percentage, this would increase the maximum credit per employee from $5,000 to $7,000 per quarter (up to $14,000 for the first two quarters in 2021).
    • The following language was added to the ERTC provisions that specifically addresses PEOs: Any forms, instructions, regulations, or guidance described in paragraph (2) shall require the customer to be responsible for the accounting of the credit and for any liability for improperly claimed credits and shall require the certified professional employer organization or other third-party payor to accurately report such tax credits based on the information provided by the customer. [Emphasis added.]
      It is not clear whether this provision applies retroactively or just to new credits taken in 2021.
    • Makes the ERTC available if the business experienced a decline of at least 20 percent in gross receipts (instead of a 50 percent decline) as compared to the same calendar quarter in the prior year.
    • Modifies the small employer definition of qualified wages to apply to employers that have 500 or fewer employees (instead of 100 of fewer employees).
  • Creates a temporary employee retention credit of 40 percent of qualified wages up to $6,000 (maximum credit of $2,400 per eligible employee) for eligible employers affected by certain qualified disasters. This credit is retroactive and does not apply to COVID-related disasters.
  • The bill also extends the Work Opportunity Tax Credit for five years.

Paycheck Protection Program and Other Small Business Assistance

In addition to the tax provisions, the COVID-19 relief portion of this legislation contains additional assistance for small businesses, which NAPEO has been lobbying Congress in support of. Specifically, it contains the following provisions designed to assist small businesses:

  • Creates a second loan from the Paycheck Protection Program, called a “PPP second draw” loan for smaller and harder-hit businesses, with a maximum amount of $2 million.
  • Creates a simplified application process for loans under $150,000.
  • Expands the expenses that can be covered by a PPP loan.
  • Makes 501(c)6 organizations that do not lobby eligible for PPP loans.
  • Makes the expenses covered by PPP loans tax deductible.

Details on these provisions can be found on this document provided by the Community Banker’s Association.

Unemployment Insurance

The COVID-19 relief provisions also make the following changes to unemployment insurance:

  • Unemployed individuals get an additional $300 per week from December 26, 2020 to March 14, 2021.
  • Extends and phases out Pandemic Unemployment Assistance (PUA), a temporary federal program covering self-employed and gig workers, to March 14, 2021 and extends benefits from 39 to 50 weeks with all benefits ending April 5, 2021.
  • Extends and phases out Pandemic Emergency Unemployment Compensation (PEUC) which provides additional weeks when state unemployment runs out, to March 14, 2021 (after which no new applications) through April 5, 2021.
  • Extends provisions to March 14, 2021, including interest-free loans to the states.

No federal money was provided to shore up the short falls in state unemployment funds.

Miscellaneous Provisions

The omnibus spending bill contained so-called “tax extenders,” which are temporary provisions in the tax code that are designed to support specific economic activities. There are two provisions of interest to PEOs that have been extended for five years. They are: 

  • The employer credit under section 45S for paid family and medical leave, originally enacted as part of tax reform in 2017.
  • The expanded exclusion for employer-provided educational assistance, including student loan repayment benefits as enacted as part of the CARES Act. NAPEO has lobbied in support of this provision.

For more information visit NAPEO’s COVID-19 Resource Center or contact Thom Stohler.

NAPEO is offering a webinar on this bill and the impacts for PEOs and their clients on January 8th at 2pm EST. Not a Member of NAPEO? Find out how to join here.

Looking for a PEO or have questions on whether or not a PEO is right for you; visit our site at Libertate Insurance and get the questions you have answered.

Small Business Snapshot

Our friends at NAPEO released the 2020 4th Quarter Small Business Snapshot, click on the link for more details.

Source: NAPEO; Opportunity Insights Economic Tracker, Small Business Revenue tracker, revised data, updated November 9,2020.

Some of the interesting data reported and tools noted below:

  • Small business reports 31% lower daily revenue than Q1;
  • 74% of small business are reporting large or moderate negative impact related to the pandemic;
  • The Wells Fargo/Gallup Small Business Index through 2020 Q3 is showing the current trend in line with Q3 2008 as well as future expectations; Check out the Wells Fargo website for Small Business Resources to help with your 2021 Business Plan;
  • The Unemployment rate is showing a 3.3% increase from Q3 2019 with Hawaii, Nevada and New York showing the highest.

Not partnered with a PEO? Connect with us and let us know how we can help! Find out more on our website here.

More Important Information on Covid-19; CDC and Workers’ Compensation

The start of Flu Season, a potential 2nd Wave of Covid-19 and employers focusing on phased re-openings here are the latest updates and reminders for things you need to know.

CDC Redefines “Close Contact” Under COVID-19 Guidance

On Wednesday, Oct. 21, 2020, the Centers for Disease Control and Prevention (CDC) clarified what “close contact” means as it relates to COVID-19-prevention guidance.

Previously, the CDC defined close contact as spending 15 straight minutes within 6 feet of another person. Now, the organization redefined the term to mean a total of 15 minutes within a 24-hour period. That means short, repeated contacts throughout the day count toward that 15-minute threshold.

The CDC strongly encourages anyone who comes into “close contact” with a COVID-19 patient to self-quarantine for two weeks.

Employer Takeaway

This update serves as a stark notice that COVID-19 may spread more easily than formerly understood. It may even prompt more contact tracing among health departments and workplaces, especially in situations where contact was previously considered too brief for infection. Furthermore, this new definition may be most impactful in offices, factories and other facilities that have many people in close proximity for extended periods. Such locations may implement stricter mask regulations if they haven’t yet done so, per CDC recommendations. The organization stresses that wearing masks is one of the best ways to fight against COVID-19, especially since many infected patients do not exhibit symptoms.

The CDC has amended COVID-19 guidance before on several occasions, usually adopting stricter positions. With that in mind, employers can reasonably expect more updates in the future.

Workers’ Compensation Changes

Under most state workers’ compensation (WC) laws, COVID-19 may be a compensable, work-related condition only if an employee can show that:

  • He or she contracted the coronavirus while performing services growing out of and incidental to his or her employment; and
  • The disease arose out of that employment (work relatedness).

As of July 29, 2020, however, several states have made—or are in the process of making—changes that reverse this burden for certain employees. In general, these changes mean that it would be an employer’s burden to prove that an employee did not contract COVID-19 on the job, rather than the employee’s burden of proving that he or she did contract it on the job. While most of these changes apply only to certain types of workers—such as first responders, health care providers or those who are otherwise deemed “essential”—some changes apply the new presumption more broadly.

Many states have also taken actions that aim to reduce the impact of COVID-19-related claims on an employer’s WC premium rates.   

This Compliance Bulletin provides general information about the COVID-19-related changes made to state WC laws and policies.

Action Steps

Employers should follow all workplace safety guidance from the Occupational Safety and Health Administration (OSHA), the Centers for Disease Control and Prevention (CDC) and local health authorities to minimize the risk of employees contracting COVID-19 on the job. Employers should also familiarize themselves with state laws that may impact their workers’ compensation COVID-19 obligations and premiums.

Background

Workers’ compensation is a no-fault system that provides medical expenses and lost-income replacement for employees who sustain injuries or illnesses that arise out of and in the course and scope of their employment.

Each state has its own workers’ compensation law that governs of the process of determining whether an injury or illness is work related and therefore compensable.  Although workers’ compensation benefits are usually the exclusive remedy against an employer for any compensable condition, employers may also be subject to private lawsuits if they intentionally cause harm to an employee or fail to have workers’ compensation coverage as required.

COVID-19 Compensability Presumptions 

The table below provides a general overview of the changes to state workers’ compensation laws that have been enacted to provide a presumption that COVID-19 is a compensable, work-related condition for certain employees. Similar changes remain pending in other states. Employers should become familiar with (and regularly check for updates to) the detailed requirements that may affect them under all applicable laws.  

StateAffected EmployeesOrder/Change
AlaskaFirst responders and health care workers.Senate Bill 241
CaliforniaAll employees not working from home.Senate Bill 1159
ConnecticutAll essential workers.Executive Order 7JJJ
FloridaFront-line state employees.Directive 2020-05
IllinoisFirst responders and front-line workers, including essential workers who encounter members of the general public or work in a location with more than 15 employees.House Bill 2455
KentuckyAll essential workers.Executive Order 2020-277
MinnesotaFirst responders and health care workers.HF 4537
MissouriFirst responders.Emergency Rule
New HampshireEmergency response and public safety workers.Emergency Order 36
New MexicoState workers who provide direct assistance or care to COVID-19 patients or work inside a facility that provides direct assistance, care or housing to COVID-19 patients.Executive Order 2020-025
North DakotaFirst responders and health care workers.Executive Order 2020-12
UtahFirst responders and health care workers.Senate Bill 3007
VermontWorkers in jobs involving regular physical contact with known sources of COVID-19 or regular physical or close contact with patients, inmates or members of the public.Senate Bill 342
WashingtonFirst responders and health care workers.L&I Policy
WisconsinFirst responders and health care workers.Assembly Bill 1038
WyomingAll workers.House Bill 1002

Premium Calculations

The premiums an employer must pay for coverage under a workers’ compensation insurance policy is usually determined based on payroll, measures of risk associated with the jobs that workers perform and the number and type of WC claims that have been made against the employer in the past. Due to the effects the COVID-19 pandemic may have on these factors, some states (including California, for example) allow employers to reclassify employees or exclude COVID-19-related claims from their calculations.

Contact your PEO for additional information and ways to stay organized and healthy. If you are not currently benefiting from a PEO relationship contact Libertate Insurance, let us know how we can help.

This information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

Preparing for the 2020 Flu Season – Debbie Downer Alert

Knowing the difference in symptoms. Check out this great visual from WFMTV news.
Brought to you by the insurance professionals at Libertate Insurance  

Preparing for Flu Season During the COVID-19 Pandemic

Each year, the seasonal flu has a marked impact on businesses and employers, causing increased absenteeism, decreased productivity and higher health care costs. The past few flu seasons have seen high hospitalization and mortality rates, which has public health experts fearing another deadly flu season.

Unfortunately, the 2020-21 flu season isn’t the only health crisis employers and employees have to address this year. The COVID-19 pandemic is still affecting the workforce, and the combination of another potentially bad flu season and the pandemic has public health experts worried.

As an employer, are you well-positioned to help keep your employees healthy and minimize the impact that influenza has on your business? The Centers for Disease Control and Prevention (CDC) recommends strategies to help employers fight the flu and talk to employees about what a flu season during the pandemic looks like.

Educate Employees on the Flu vs. COVID-19

Unfortunately, because the flu and COVID-19 are both contagious respiratory illnesses, some of the symptoms are similar. For example, as we now know, common flu symptoms include the sudden onset of fever, headache, fatigue, muscle aches, congestion, cough and sore throat. All of those are currently considered symptoms of COVID-19.

One of the difficult aspects of the COVID-19 pandemic is that the symptoms are wide-ranging and vary in severity. Some with COVID-19 may experience little to no symptoms, while others may be severely ill and require hospitalization.

Due to the similarity in symptoms between COVID-19 and the flu, it may be difficult to determine whether an employee has the flu or COVID-19 without being tested. As such, it’s important to encourage employees to stay home if they are sick and suggest a COVID-19 test.

Consider allowing employees to work from home, if they’re healthy enough to complete their work or while they wait for test results, and encouraging employees to take paid time off if they need to. If an employee tests positive for COVID-19 and needs to take time off to recover, they may be eligible for leave under a multitude of federal and state laws.

Preparing Your Workplace for Flu Season During the Pandemic

There are a variety of steps employers can take to protect employees and prepare for flu season—which may include steps you’ve taken in response to COVID-19—regardless of whether employees are in the office or working remotely.

Here are some strategies to consider:

  • Host an on-site, socially distanced vaccination clinic—One of the most important steps for preventing the flu is to get an annual flu vaccination. The CDC recommends that all people over the age of 6 months get a flu vaccine each year. Hosting an on-site flu vaccination clinic can help educate employees about the importance of vaccination and make it easier for them to get vaccinated.
  • Encourage employees to get the flu vaccine—If you choose not to or are unable to provide an on-site flu vaccination clinic, you can still emphasize the importance of vaccination to your employees and educate them about local opportunities to get vaccinated.
  • Disinfect and clean the office—Because the flu virus and the virus that causes COVID-19 can remain on surfaces long after they’ve been touched, it’s important that your business frequently cleans and disinfects the facility. Some best practices include:
    • Cleaning and disinfecting all frequently touched surfaces in the workplace, such as workstations, keyboards, telephones, handrails and doorknobs. Check with your cleaning company, they may not be performing these extra steps to ensure the viability of your employees and ultimately your company.
    • Discouraging workers from using other workers’ phones, desks, offices, or other tools and equipment, when possible. If necessary, clean and disinfect them before and after use.
    • Providing disposable wipes so that commonly used surfaces can be wiped down by employees before each use.
  • Implement and enforce social distancing protocols—Social distancing is the practice of deliberately increasing the physical space between people to avoid spreading illness. Social distancing best practices for businesses can include:
    • Avoiding gatherings of 10 or more people
    • Instructing workers to maintain at least 6 feet of distance from other people
    • Hosting meetings virtually when possible
    • Limiting the number of people on the job site to essential personnel only
    • Leveraging work-from-home arrangements and staggered shifts when possible
    • Discouraging people from shaking hands
  • Employee safety training—Ensure that all employees understand how they can prevent the spread of COVID-19 and the flu, taking into account:
    • Respiratory etiquette and hand hygiene—Businesses should encourage good hygiene to prevent the spread of respiratory illnesses like the flu and COVID-19. This can involve:
      • Providing tissues and no-touch disposal receptacles
      • Providing soap and water in the workplace
      • Placing hand sanitizers in multiple locations to encourage hand hygiene
      • Reminding employees to not touch their eyes, nose or mouth
      • Asking employees to wear a mask or face covering when social distancing is not possible
    • Staying home when sick—Encourage employees to err on the side of caution if they’re not feeling well, and stay home when they’re sick or are exhibiting common symptoms of COVID-19 or the flu.

These strategies may not be right for every organization. Depending on the nature of your business, you may need to implement additional prevention strategies.

The key is having a strategy and making sure everyone is informed and on board. Reach out to Libertate Insurance for additional resources on preparing your workplace for flu season.

Where Does My PPP Funding Leave Me?

The U.S. Chamber of Commerce has useful guidance in regard to the Paycheck Protection Loans under the Paycheck Protection Program (PPP).  Weighing on most of us is how these loans are going to impact our businesses long term, as the guidance from the Small Business Administration (SBA) keeps changing.

The SBA was very quick in issuing the note agreements, payment terms and interest rates on the Economic Injury Disaster Loans (EIDL), also noting that if an advance was given under these loans the advance amount would be deducted from the potential forgiveness of the PPP loan. Yes, an advance under one loan would be an offset to the portion of allowable forgiveness under another!  The EIDLs are not forgivable but they have been set up on 30 year terms; seemingly manageable.

One important thing I’ve taken away from this experience is that the PPP loans were issued and managed through the SBA approved private lenders and then backed by the SBA. This meant, after digging around on the internet, calls to our lender and calls to the SBA that the forgiveness application would be handled by the lender.  Oddly enough, it didn’t seem like our lender knew that.  After much persistence, I found that forgiveness applications were being accepted and processed for those applicants that received funding in excess of $2M.  That meant the “small-business” funding recipients, the originally intended recipients of the CARES Act would have to wait for any clarity or solace on how these funds would ultimately be of impact.

I think it’s safe to assume that we all understand the rules as they currently stand and we are admittedly thankful for the CARES Act.  The end game goal with the PPP loan is that you needed to keep staff on payroll, if you laid anyone off you needed to rehire them and overall you needed 60% of the funding to go towards payroll with the remaining funding allowed towards mortgage interest, rent and utilities.

Again, that leaves me with the question of what the overall impact to the business will be. This is where it counts!  Let’s for a moment consider that we have utilized the funding properly and within the terms of forgiveness at 100% with the EIDL advance that was received also having an impact.  We essentially received a pass for a period of time related to our payroll costs, rent, and utilities.  The expenses are still sitting on our P&L,  we have a note that will be forgiven which will ultimately end up as income, but the IRS will be limiting the deduction of these expenses from our business’ taxable income.

What does this mean?  Now is the time to pull your General Ledger and scour through your P&L line items.  Understand your normal deductible business expenses and make sure that you have items classified properly for your tax reporting.  Don’t leave this for your tax preparer to question; nobody knows your business like you do. Who in your company is responsible for credit card allocations? How many times do you use your corporate credit card and the accounting team inadvertently books those charges to meals & entertainment or distributions, when in actuality it was a corporate team building lunch related to a client account or a client meeting, i.e. business meal, marketing or travel related expenses.? Meals & entertainment are limited at 50%, be cautious as to what is classified here.  Marketing, travel and mileage are 100% deductible.

In summation, if the PPP funding was utilized within the forgivable guidelines you should be able to apply for forgiveness at 100% less the EIDL advance you’ve received. These forgiven expenditures will be unallowed deductions on your tax filing for the year so make sure your other business related expenses are classified properly to capture as many deductible expenses as possible to reduce your tax liability. Connect with your lender and identify their protocol for the forgiveness application. A Professional Employer Organization (PEO) can be immensely helpful in providing canned reporting for both the PPP application process and the allowable payroll costs under the 8 week or 24 week option under the PPP loan needed for the forgiveness application.  

If you are unsure as to whether or not a PEO makes sense for your small business, we can help you decide! Libertate Insurance Services has a client first motto and works hard to help transfer risk in your business. So whether you’re looking for a PEO or you are a PEO seeking hard-to-place markets, connect with us today. Visit our website here for more info or check out the rest of the PEO Compass blogs here.

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Research credits: IRS.gov, uschamber.com, sba.gov

When Robert Hartwig Talks, People Listen…

As I was pulling this post together, for good reason, the old EF Hutton commercials we grew up with (dating myself)…

…came to mind. “When E.F. Hutton talks, people listen”…

As EF Hutton was considered (or at least advertised) as “the smartest guy in room” for all things investments; the same holds true for Robert Hartwig @Bob_Hartwig when it comes to insurance economics. He is the guy insurance company CEO’s call to help predict the future and someone I have had the pleasure to meet and see present on a few occasions. You will not see anyone provide more data and direction in a short session that is credible and meaningful.

Robert, a PHD/CPCU, was the former Chief Economist of the Insurance Institute of America and currently serves as the Clinical Associate Professor of Finance, Risk Management & Insurance @ USC’s Darla Moore School of Business. His latest presentation points to some areas that are important to understand and budget for.

https://www.uscriskcenter.com/wp-content/uploads/2020/09/Inland-Marine-UW-Association-American-Institue-of-Marine-Underwriters-9-30-2020.pdf

I have listed some of my key take-aways below and the slide number you can reference for the detail:

Slide 12 – 12.5-25% reduction in workers’ compensation premiums based on rate reductions coupled with drop in exposure basis due to COVID-19. COVID-19 Claims will not be used for rate-making purposes in most states until 2021. All other lines are seeing material drops in written premium due to usage, but rates at the same time are on the rise.

Slide 13 – Range of workers’ compensation losses on a national basis due to presumption is $.2 – $92B … quite a delta and as you will note, and a far greater one than any other line (which are also not yet understood). The range for Business Interruption losses is next with anywhere from $2B – $22B expected. The courts will be the most impactful on where this end result comes in based on policy interpretation. Policy language and intent will be the battlefronts.

Slide 15 – Cost of COVID v comparable pandemics in recent age – the cost and number of countries impacted by COVID-19 versus other pandemics (SIKA, Swine Flu, SARS etc.) is staggering and exponential.

Slide 30 – Presents the investment yield trends for 10-year US Securities which is a foundational “safe” investment for insurance carriers – down 61%. Puts more pressure on operational results which in turn, more pressure on upward pricing.

Slide 31 – 9 of the the top 10 ever point drops on the S and P ever occurred in 2020. The 3’rd largest percentage drop in history occurred on 3/16/20 at -11.98%/-324.9 points. This volatility is of grave concern to the investment strategies of the insurance carrier community. This also puts upward pressure on pricing.

Slide 41 – Business closures will cause debt of $3T for at least a generation to overcome. This is very saddening and a complex issue to make a call on. Be safe and put us in debt for another generation or open up and hope for the best? Question of the century –

Slide 47 – Rates on most lines of insurance (with the exception of Workers’ Compensation) are rising at a rapid pace. Umbrella (20%) and Directors and Officers insurance (16.8%) being hammered the hardest, with Business Interruption (9.7%), Commercial Auto (9.6%) and Employment Practices Liability insurance (9.4%) also expecting hefty increases.

Slide 50 – Business Interruption insurance will be highly litigated going forward, especially on those policies that do not have a pandemic disease exclusion. This and the presumption issue in regard to workers’ compensation are what will cause the greatest uncertainty going forward as to the exposure to the insurance community and how they react as a result the pandemic.

In conclusion, it has been a long cycle of premium reductions. Drop of exposure basis (payrolls, sales, miles travelled etc) may neutralize overall premiums to some extent, but the “as is or lower” rate renewals of the last decade will be very tough to navigate this year. Get out ahead of your renewals, especially on the specialty casualty side. Let us know if we can help.