March 25, 2020 by David Gambrill
Canada’s national broker association issued an open letter to its insurer partners this week, recommending flexible payment options and emergency coverage extensions for clients in need, as well as support for single-office brokerages disabled by an outbreak of COVID-19 requiring staff isolation.
“It has become clear that this pandemic is presenting both a health crisis, as well as an impending financial crisis for many business owners and individual Canadians,” Insurance Brokers Association of Canada (IBAC) president and CEO Peter Braid wrote in a letter to IBAC insurance company partners, dated Mar. 23, 2020.
“This is the time that our industry needs to demonstrate the important stabilizing role that we play in society. More than ever before, we need to collaborate, and find every possible way to support the customers that we mutually serve.”
Canada’s federal government officially passed Wednesday an $82-billion emergency coronavirus support package, designed to help blunt the economic impact of the global pandemic on Canadian workers and businesses. In Canada, as of 11 a.m., there were 1,959 confirmed cases of COVID-19, with 27 deaths. Ontario and Quebec have shut down all non-essential services in an effort to encourage people to self-isolate and slow down the spread of the disease.
IBAC’s letter to insurers reflects some of the brokers’ early experiences with clients in the wake of country-wide social distancing. It proposes three recommendations based on issues that brokers have reported thus far during the COVID-19 pandemic. The letter acknowledges that “many of our insurer partners have already conveyed strong messages to their broker partners about how brokers and their clients will be supported through these difficult times.”
Two of the issues raised in IBAC’s letter relate to the economic consequences of a near-certain global recession. Massive job losses are expected to result from social distancing policies that Canada is enforcing to slow the spread of COVID-19. Last week in Canada, about half a million people applied for Employment Insurance, compared to 27,000 applications that are usually filed during the same period.
Responding to the financial distress of their clients, Canada’s brokers are calling on insurers to “consider ways to be flexible in terms of payment of premiums and accounts receivable. Dealing with any special circumstances that our customers may encounter compassionately, and on a case-by-case basis, will ensure that we continue to place their interests first.”
Second, “it is critical that our industry take a consistent approach with respect to the automatic extension of policies during a state of emergency,” IBAC’s letter reads. “For those companies who don’t currently have a ‘Declaration of Emergency’ endorsement in their policies, we would strongly recommend that you consider following these important ‘hold-covered’ protocols to prevent a disjointed industry approach.”
IBAC’s third recommendation deals with the hardship that may befall Canada’s single-office brokerages during a pandemic. Namely, what happens when brokers in a small shop must self-isolate after a confirmed or suspected COVID-19 diagnosis?
“A single-office broker could face a situation where all staff are too ill to work, or self-isolating due to potential exposure,” IBAC’s letter notes. “This could mean requested underwriting detail is not forwarded and renewals are not being ordered. Insurer partners are an important part of a broker’s business continuity plan. Having our insurer partners support any brokerages in this circumstance, similar to an office affected by a flood, fire or other crisis, would help to minimize operational and client impacts.”
IBAC’s recommendation concerning single-office brokerages “is for a commitment that policies will not lapse or be canceled in the event that a brokerage becomes suddenly and completely disabled by an outbreak of the virus. Single-office brokers do not have the option of using another office as a back-up.”
Commenting on the letter, IBAC President Kent Rowe said the nation’s brokers were “willing to do whatever it takes to make sure that their insurance coverage remains uninterrupted as much as possible during this pandemic.” He said brokers were committed to working with their clients, insurance providers, and all other industry stakeholders to ensure that Canadians remain protected.