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Brokers urged to stay on top of coverage changes as businesses re-open


June 22, 2020   by David Gambrill


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Brokers are advised to be aware of the “second wave” — and that doesn’t refer to the anticipated increase in the number of novel coronavirus infections in the fall.

No, brokers are now being cautioned about the new wave of carriers’ coverage changes and adjustments arising from the phased re-opening of Canadian businesses and the economy.

When the World Health Organization declared the novel coronavirus to be a global pandemic on Mar. 11, brokerages made extraordinary efforts to change clients’ coverages — auto and commercial lines coverages in particular — to reflect the lower risk exposures brought about by government shutdowns and social distancing rules.

About 80% of Canadian small and medium-sized businesses were partially or fully closed at the height of the pandemic in March and April — many by provincial order — to help slow the spread of the virus, according to figures released by the Canadian Federation of Independent Business (CFIB).

About 40% of Canadian SMEs reported losing more than 70% of their revenue during this period because of the shutdowns, an April CFIB survey found. And so, brokers arranged temporary relief measures with their markets to reflect their clients’ decreased risk when their businesses were shuttered.

But now those shutdowns are starting to be lifted, and more policy changes and adjustments will need to be made as the temporary measures come to an end, one broker E&O expert reminded brokers in a LinkedIn post.

“As we move along the process, you will be seeing temporary amendments and accommodations by carriers coming to an end,” Hugh Fardy, senior vice president at Arthur J. Gallagher Canada Limited, cautioned in a post under the title, “Brokers Errors & Omissions Reminder.”

“We must make sure we are in touch with impacted clients, advising them on how to adjust cover to deal with those changes. Risk put on hold or changed short-term will be back. We will continue to see risk changes, new process, new products, and new uses of property will change exposure that must be addressed.”

In particular, Frady noted, carriers are continuing to make adjustments and changes to policies in areas such as business interruption, cyber and general liability.

“New cover approach, new restrictions and exclusions need to be explained to clients and dealt with,” Fardy posted. “Remember Identify, Advise and DOCUMENT!”