Delivering remarks about the property/casualty insurance industry’s response to the growing impacts of COVID-19 on policyholders late last week, an industry group executive called on the NAIC to ease some of related regulatory requirements.

“The more the NAIC can help coordinate data calls to make them uniform, limited in scope and reasonable in timing, the more insurers will be able to focus on our customer service obligations,” said David A. Sampson, president and CEO of the American Property Casualty Insurance Association (APCIA) before the National Association of Insurance Commissioners (NAIC) special session on COVID-19.

Sampson, who also discouraged growing calls for retroactive coverage under policies not intended to pay virus-related business income losses, noted the “unprecedented conditions,” stressing industry systems as insurers seek to work with regulators. The issue of coordinated, reasonable data calls is one that Sampson said warrants immediate consideration by the NAIC and state regulators.

Others he listed were:

  • Ensuring that requests for insurers to be forgiving about premium due dates (and other deadlines) remain consistent with prudent insurance principles and similar across states and across lines.
  • Providing parallel accounting relief for insurers that have given policyholders forbearance to make late payments.
  • Allowing insurers to deploy new technologies such as drones, mobile applications and telemedicine for workers compensation claims without running afoul of regulatory barriers.
  • Relaxing requirements for first-class mail delivery and allowing electronic delivery for all communications to customers, the NAIC and state insurance departments.
  • Refraining from imposing demands on the content of consumer communications. “If there are necessary communications mandates, they must be uniform and flexible.”
  • Exercising flexibility in administering and enforcing statutory time restrictions related to claims handling, notification obligations, third-party administrator audits and regulatory filings.

Sampson’s remarks came after states including New York and Florida had announced special COVID-related requirements.

In instructions published on March 10, for example, the New York State Department of Financial Services (DFS) asked insurers authorized in the state to submit details of business interruption policies that have been provided to insureds, as well as the coverage each policy offers regarding COVID-19.

Explanations regarding the commercial property insurance each insurer has written in New York as well as details of business interruption coverage provided were required to be submitted by Wednesday of last week.

“Given the potential impact of COVID-19 on business losses, particularly concentrated effects in local communities, DFS considers insurers’ obligations to policyholders a heightened priority,” DFS stated in its March 10 instructions.

The instructions required each insurer to provide to DFS the volume of business interruption coverage, civil authority coverage, contingent business interruption coverage and supply chain coverage the insurer wrote that has not lapsed as of March 10, expressed in amounts of direct premium, policy types and numbers of policies written of each type.

Each insurer was also required to examine the policies it issued and explain the coverage each policy offers in regard to COVID-19, both presently and in the future if there is potential for COVID-19 coverage as the situation could develop. For each policy type, insurers were asked to prepare information in a clear and concise explanation of benefits suitable for policyholder review.

The instructions then asked insurers to send the explanations to each of their policyholders for the applicable policy types as well as to DFS, along with a representation that the explanations have been provided to policyholders.

In a March 10 circular letter, DFS said it is also requiring that each regulated entity provide detailed descriptions of business continuity plans within 30 days or sooner. Specifically, the letter calls for descriptions of both “plans of preparedness to manage the risk of disruption to its operations” and plans “to assess and monitor the financial risk that may arise from COVID-19.”

In a list of eight items to be included “at a minimum” to describe operational preparedness, the DFS calls for: information on preventative measures to mitigate the risk of operational disruption; assessments of facilities, systems and procedures needed to continue critical operations and services when employees are unavailable for longer periods or are working offsite; assessments of security of remote access; employee protection strategies; assessments of the preparedness of critical third-party service providers and suppliers. The DFS also asks for details of communication plans with various stakeholders, testing plans, and overall governance and oversight of the business continuity plan.

Six items to be discussed with respect to financial impacts include an “assessment of the valuation of assets and investments that may be, or have been, impacted by COVID-19” and “assessment of the overall impact of COVID-19 on earnings, profits, capital and liquidity.”

In Florida, the Florida Office of Insurance Regulation (OIR) also directed all insurers to review and update their business continuity plans in a memorandum issued on March 16.

Insurer continuity plans must provide a framework for the continuation of company operations, including key insurance functions such as policy issuance, premium collection, claims adjustment and payment, and policyholder service, OIR said. The continuity plans should also account for DOH and CDC guidance surrounding COVID-19, including executive orders issued at the state and national level.

Companies should consider all potential impacts of COVID-19 within their continuity plan, including impacts to essential operations, key personnel, supply chain, vendors, contractors and policyholders, OIR said.

“If in response to COVID-19, business operations are compromised to the extent that it jeopardizes the company’s ability to provide essential insurance services to policyholders, the company must immediately notify OIR, detailing the extent to which operations are compromised,” the memorandum further notes.

(This article includes reporting by Elizabeth Blosfield, East Coast Editor of Insurance Journal, and Amy O’Connor, Southeast Editor of Insurance Journal. Longer articles about the New York and Florida rules are posted on IJ‘s website)