April 17, 2020 by Adam Malik
Sports equipment maker Bauer made headlines when it announced it would shift its production to making face shields for front line employees deemed essential during the COVID-19 pandemic. Behind the scenes helping to make it possible was its broker, BFL Canada, and its insurer Zurich Canada. The P&C organizations teamed up to make sure Bauer’s insurance needs were covered when the company made a material change in risk to its business.
It’s not a simple matter to change over from making face shields for hockey and lacrosse players, explained Matthew Arbuckle, Oakville, Ont.-based casualty underwriting specialist with Zurich.
“A face shield itself it’s not that big of a drastic departure from the current product line,” he said. “But a change to the end-user, that can be just as significant of a change as anything else. In this case, frontline responders in the middle of a pandemic — that’s a far cry from members of a hockey team or lacrosse team.”
So changing the product design and creating a new product segment creates a different set of exposures.
Sports equipment has an intended use. That’s what the company is covered for producing. “So, selling face shields to government and nurses and doctors and other frontline staff and frontline heroes, this is new to Bauer, and it can present some different exposures,” Arbuckle told Canadian Underwriter.
A typical face shield to be used by lacrosse players is designed to withstand impact from sticks, hits and balls. And they’re designed to be used on the field of play. Compare that usage to a healthcare worker in a hospital.
“These new face shields, they’re going to be worn for 12-hour shifts,” Arbuckle said. “They’re not designed to prevent the spread of COVID-19, but they are intended to be something of a sneeze guard. That’s not the same thing.”
Important in providing the right insurance coverage is defining what the product is: Is it a face shield or a mask? There’s a difference, according to Arbuckle.
“An N95 mask means that you may be using it to prevent the spread of the coronavirus, where the face shield is meant to guard from any kind of moisture getting towards the N95 mask,” he said. “It’s understanding what the intended use of the product was going to be and how they’re presenting that to whomever the end user was going to be.’
Ensuring the right coverage meant understanding what exactly the company was doing. Zurich had to work “hand-in-hand with Bauer’s sophisticated risk management team … and their broker BFL, which was stacked full of insurance experts,” Arbuckle said.
He also pointed out that this is a time when all those years of building relationships between client, broker and insurer come into play. “It’s important to note that our ability to help Bauer with an insurance solution that allowed them to make these face masks — this was made possible due to our strong relationship and deep sense of trust we’ve built over the past 10 years,” Arbuckle said.
John Antonecchia, vice president and client executive of BFL’s risk management and M&A practice, agreed. The urgency placed by leaders from all levels of government to procure personal protective equipment “required an expedited underwriting timeline and an all-hands-on-deck approach,” he added.
The whole process took about a week to turnaround. Arbuckle estimated that this type of endeavour would typically take about a month. But as Antonechhia said, everyone dropped what they were doing to work on this project.
“I think recognizing that this was a humanitarian effort and not a business transaction changes where you place this on your list of priorities,” Arbuckle said. “So I kind of dropped everything and dove headfirst right into this to make sure we could handle this very quickly.”
BFL worked with a number of Bauer’s departments — including risk and compliance, research and development, legal, and quality assurance — to make sure everyone understood the risks.
“Zurich and BFL understood the importance of this project, and always had the ‘bigger picture’ and best intentions in mind,” Antonecchia said.