COVID-19 Pandemic & Insurance

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. 

For all our clients, the risks of losses to their businesses resulting from staff absence, supply chain reduction, production/service stoppage, loss of market, surplus inventory and reduced customer demands, render new ways of working under most Business Continuity Management (BCM) Plans out of date. All BCMs must be modified in view of the present realities. 

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. 

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