Risk in Context

COVID-19: Navigating the Pandemic Response Cycle

April 16, 2020

On 15 April, Marsh hosted a webinar for clients navigating four key challenges across the pandemic cycle, and fortifying their organizations through resilience, planning, and smart choices regarding their people, operations, and revenues.

The webinar was paneled by:

Joan Collar, Mercer Marsh Benefits Leader, Asia
Peter Johnson, Client Advisory Services Leader, Asia
Seth Peller, Chief Client Officer, North Asia 
Dennis Dalati, Claims Advocacy Leader, Asia
Adam Russell, Placement Leader, Asia

who gave in-depth elaborations of each of the challenges and how Marsh can help.

Cost Savings

From a risk management and insurance perspective, businesses have several tools available to manage costs and improve cash flow. These approaches below were shared by Seth and Adam.

Claiming Business Interruption Losses

Speak with your Marsh broker if you believe you have a potential Business Interruption (BI) claim. We can help assess if the policy criteria are met and, subsequently, support the claims preparation to improve expediency.

Reduce Future Insurance Premiums and Workers Compensation

We can identify your most economically efficient means to finance your risk through Risk Finance Optimization (RFO), which ultimately gives you information on which risk management programs provide the best financial returns.

Captive Solutions

This risk financing option can be a long-term alternative strategy, and the use of a captive may provide access to reinsurance markets and potentially more efficient capital.

Return Premiums

As organizations’ revenues decline during the COVID-19 outbreak, if you have an adjustment clause in the appropriate policy, it may be adjusted on the basis of reduced revenue to provide you with a return premium. We recommend discussing this with your broker to determine viability.

Surety Bonds

Financially strong companies can consider the use of surety bonds to reduce the utilization of bank facilities and improve cash flow.

Insurers are working quickly with clients through these difficult times. It is vital to work with your broker to understand the changes insurers are imposing and how they impact coverage.

Employee Wellbeing and Productivity

Joan commented that with more countries on lockdown, the initial focus on benefits review of exclusions has shifted to mental resiliency and financial wellbeing.

Mental Resiliency and Home Ergonomics for Work from Home

For some companies, effective mental health programs include Employee Assistance Programs (EAPs), but they are just a part of a larger effort that can cover:

  • 24/7 hotline access.
  • Outreach workshops for managers to support employees.
  • Virtual counselling groups.
  • Additional financial planning workshops (especially if employees are experiencing any loss to income as a household).
  • Other diagnostic tools to balance work, home, and engagement.

Other areas include ergonomics, meditation, and physical activities. Some companies flex working hours to suit the home dynamic while others use four-day workweeks for the benefit of their employees’ mental health.

Digital HR Transformation

Joan added that it is vital for HR professionals to revisit their digital communication strategies and tools, in particular for employee communication. Some examples include HR apps, email frequency, Work from Home protocols, benefits program adequacy for pandemic coverage, responses from leaders, and so on.

COVID-19 has revealed that telecommuting is feasible for many businesses, therefore HR and benefits policies need to be adjusted. The rise of flexible and choice-based benefits will require robust digital platforms to administer such programs.

Financial Wellbeing Preparedness

Beyond financial planning workshops, consider providing your employees with flexible or voluntary benefits. This can solidify your company’s brand positioning during and after this pandemic cycle — important for employees both current and future.

The pandemic, surprisingly, has forced a conversation, particularly in Asia, that led most firms to commit to providing a more holistic coverage of employee wellbeing through their benefits programs.

Changing Risk Profile

To manage the changes to your risk profile, Peter walked through a few considerations for companies.

Business Continuity Plan Reviews and Updates

Organizations need to improve their pandemic preparedness, with an emphasis on:

  • Staff safety and health, by implementing a flexible and adaptable workforce strategy. 
  • Facilities and asset protection, and minimizing the possibility of full premise closure. 
  • Utilities, ICT infrastructure, and supply chain. 
  • Economic resumption models when governments ease restrictions.

Pandemic Risk Vulnerability Assessment and Forecasting Models

These enable organizations to evaluate different risk mitigation strategies, manage tail uncertainty under different scenarios, and balance revenue interruption versus cost control decisions.

Cyber Threats

With a record number of employees working outside their companies’ protected environments, we are seeing increased levels of cyber threats. If most or all of your employees are now working from home, your business’s risk profile has fundamentally changed. Organizations should identify their most impactful loss scenarios and quantify the impact from both liability and business interruption perspectives.

Financial and Professional Liability Risk Identification

Retail, hospitality, leisure, and travel businesses should expect increased underwriting scrutiny from D&O insurers. Adam added that insurers expect heightened claims activity around Employment Practices Liability (EPL). With possible downsizing through redundancy/reduced compensation, the potential for litigation increases.

Your organization may experience one or more of these shifts in its risk profile, so consult us, your broker, and engage with insurers as early and openly as possible to manage these changes.

Risk Management and Business Enablement

Seth continued to discuss non-damage BI and consumer solutions. There are now some solutions available in the insurance market to address infectious disease risk for certain industries post-COVID19. These solutions usually have sub-limits and may require two or more triggers. Therefore, it is important to discuss with your broker about what may be right for your organization.

Our consumer solutions team also develops proprietary affinity and micro-insurance solutions that can be offered on a B2B2C and/or B2B2E basis across many industries, all designed to enhance your customers’ experience and drive revenue.

This pandemic will reshape the global business community in innumerable ways. Early indications suggest that traditional business continuity plans need a progressive overhaul to provide better preparation against second waves and future pandemics.

Cristina Vigilante

Head of Sales and Industries