Businesses of all sizes in all business sectors potentially will face very real
challenges from the COVID-19 pandemic as government makes effort to contain the
spread of the virus. The nation is on lockdown.
As your brokers, we will;
- Continue
to advise you on the implications of shut-down of your operations
following COVID-19 pandemic.
- Help
assess the dynamics of the implied risks of the shutdown.
- Assess
how your insurers would respond to potential claims and support on your
loss recoveries.
- Advise
you on the exigency to review your present corporate Business Continuity
Management (BCM) Plans.
Interruption of your business following lock-down: The most obvious risk facing all business is business interruption following government's directive for all “non-essential services or businesses” to shut down operations. Depending on your type of business or operations the implied risks of the lock-down include but not limited;
Business Interruption (BI)/Loss of Profits /Loss of Production Income
(LOPI) Insurance: The insurance cover only triggers if the business
interruption results from direct physical loss of or damage to insured
property. Business interruption caused by contagious or communicable diseases
are not generally considered as they do not result from direct physical loss or
damage.
Moreover,
whilst most policies have coverage extensions for “Civil Authority” prohibiting
access to a covered location, that coverage is often tied to physical loss of
or damage to a nearby property. Thus, whilst every policy is different, the
general expectation is that insurers are prepared to deny most COVID-19 related
business interruption claims.
Notifiable Diseases and Denial of Access: There are
really two areas where some cover may be available, both under BI cover
non-damage extensions namely notifiable diseases and denial of access.
Nigerian
Insurers have not included COVID-19 as a notifiable disease. A notifiable
disease extension is often headed murder, suicide and disease. The majority
refer to cover for “interruption of or interference to the business during the
period of insurance following…”. They then set out a list of specific
notifiable diseases that are covered. COVID-19 is not normally among these.
If we
consider a worst-case scenario it is probable that areas may be quarantined
with travel severely restricted or stopped all together. This would have a
significant impact on most businesses. Many policies contain a denial of access
extension to the BI section.
The
majority typically require the denial of access extension to be as a result of
“insured damage in the vicinity of the insured premises which prevents or
hinders access to the insured premises”.
Denial of Access: Some
policies will contain a non-damage denial of access clause which typically
covers losses arising from “an accident during the period of insurance which
results in a denial of access or hindrance in access to the insured premises
imposed by a civil or statutory authority or by order of the
government or a public authority”
There is
usually a geographical limit such as the incident having to be within one mile
of the insured premises, plus often a time trigger such as the denial must be
more than 24 hours. Under such a non-damage denial of access extension the
losses as a result of such denial of access due to COVID-19 would be covered by
the policy.
This is a
fast-moving and dynamic challenge for the insurance industry and we will
continue to engage with insurers to have a definite position should a claim
arise.
Unoccupied Premises: Under the cover provided by the
property insurers, there is a condition that states the losses emanating from
an insured premise not occupied or attended to for a period will not be paid.
The period differs from insurer to insurer and ranges from 30 days to 90 days.
Most
property policies (Buildings, Contents, Stock, Equipment, Plant etc.) stipulate
that the insurer should be notified about unoccupancy immediately. Failure to
do so could invalidate the insurance.
We are
currently reviewing all policies we arranged for our clients and will work with
insurers to suspend this condition during the crisis period. We will make
specific statement regarding your insurance with us and what we have agreed
with the insurers.
Please
let us know If your premises especially the factory and plants are unoccupied
or if you have arrangement for personnel to attend to them.
Production Facilities Decommissioning and Recommissioning: The lock-down notice to mitigate the spread of COVID-19 was very short.
Most operators and manufacturers have established decommissioning and plant
shut-down procedures in their contingency plans. It is imperative care must be
taken to ensure that all established company procedures are strictly followed
to eliminate any human errors or plant failures that can result in loss or
damage to facilities and employee safety.
We
recommend you notify us immediately should you wish to engage any contractor(s)
so we can promptly advise your insurers to name them as additional insured and
waive subrogation rights in favor of your contractor(s) as may be applicable.
Public Liability: Any liability arising from
premises either occupied or not will be paid by the insurer provided that this
is not deliberate and malicious act by your employees or personnel.
Motor: The motor insurance provided is based on the usage
of the insured vehicle. During this period, it is possible that some people
might volunteer to support people in their communities who are impacted by
COVID-19 but this should not be on commercial basis for income earning by the
owners. The insurance will not cover any loss or damage to such vehicle if used
outside the insured usage especially for hire and reward.
Employee Benefits Programs:
Group/Personal
Life Insurances: Death resulting from Corona Virus is covered and compensation
will be paid by the insurers. Where the policy is extended to cover named
critical illness, the policy will pay.
Group
Personal Accident: The Group Personal Accident Insurance
provides 24 hours cover hence any injury anywhere any time is covered except
where the period has been limited to working hours.
Workmen's
Compensation and NSITF: As most employees are working from home, the
Workmen's Compensation under the NSITF should cover any work-related injury.
Employers
& Public Liability: During this crisis period, it is possible
that some businesses may face claims for failing to protect their employees or
Third Parties from contracting COVID-19.
However, please note that the
onus will be on the Third Party or Employee to prove negligence on the part of
the Employer or Company
Employers and Public Liability
policies would cover award, damages and legal defense costs.
Employees'
Wages: During
this period, employees will be working from home and, in some cases, there may
be loss of job if the situation continues for a very long time. There is
presently no insurance cover to compensate for employees working as they are
still in employment providing labour services.
In the case of loss of job, there
might be compensation if one has bought “Loss of Job Insurance” subject to
terms and conditions of the cover provided.
New Ways
of Working (Telecommuting/Teleworking etc.): Your liability insurance
covers your employees working from home. We suggest that employers and their
staff check their home insurance policies, to make sure home working is
permitted - it is likely to be, unless any Third Party will be visiting or
manual work is being done.
Portable
Computer Equipment: In some cases, your current cover may already
include portable computer equipment used away from the office. It is also
possible that more computers would have been acquired during this period
especially for work from home.
Please check your position and
advise us so we can extend your insurance to cover the new items and extend the
location where
necessary
Health
& Safety: Health and Safety responsibilities to home and lone workers are
unchanged. Risk assessments are still needed and you're responsible for the
safety of the equipment you supply. It is important your company stipulates and
clarify your company rules for working from home to ensure adherence to basic
health and safety rules of working at home.
It may be difficult for your
Health and Safety personnel to visit every homeworker.
Business
Travel Cover and Medical Insurance: If you bought your Travel
and Medical Insurances prior to the outbreak and have a travel disruption
section, you may be covered if the trip is cancelled or curtailed outside of
your control.
If any staff travelled before the
lock-down, it is important they follow the advice ofself-isolation
or quarantine rules given by the country of visit.
Secondly, they should contact
travel providers (airline/hotel/tour operator/etc.) to discuss options such as
refunds, amendments or postponements
Thirdly, contact the Help Line
provided by the Travel Medical Insurance when sick. Medical treatment abroad
should be covered, but please be aware that local facilities may be unavailable
and medical repatriation or transfer to available facilities, will be subject
to any travel restrictions.
Professional Indemnity Liability: During
this period, there is tendency for increase in the services of Medical and IT
practitioners and other advisory services some of which can be based on faulty
parameters and result in losses.
If you
have bought this cover, compensation will be provided for any claim for
liability arising from wrong advices or advices leading to wrong judgement.
Directors & Officers Liability: At crisis
period like this, Directors and Senior Management must focus on Business
Continuity Management plans, regulatory compliance, employee protection and
shareholders’ interest. Examples include:
- Insufficiency of business continuity management plans
- Unsatisfactory financial or management decisions
- Relaxation of IT security which leads to potential data breaches, business, financial or reputational losses.
While we
ask those clients, who have this cover to evaluate the situation, we will
encourage those companies without this cover to think about it.
Data Protection/Cybercrime: General data and privacy
protection remain important and employees need to be reminded of their
obligations. Simple measures include:
- Remembering to lock the screen on their laptops.
- Securely filing or locking away paperwork.
Your IT
team should consider the use of Virtual Private Networks (VPNs), password
protected access to systems, cloud security and general standards of
encryption. It's particularly important to maintain cyber security resilience
given that a significant number of cyber/data protection claims arise from
unsecured VPNs.
Events
Cancellation: If you have organized an event it would be
understandable that you may wish to cancel it over fears of contracting the
virus.
Standard
event cancellation policies contain an infectious disease exclusion and unless
specific cover has been purchased, it is likely any costs incurred will not be
insured. Even in circumstances where specific cover has been purchased, it will
still be necessary for the venue to be directly affected by an outbreak.
We will
continue to monitor events as they unfold and engage your insurers to ensure
your operations are adequately insured during this very uncertain time.
The
entire IBN staff now work from their homes. Our Leadership teams and your
account executives are always on hand to help you in case you have any
questions.