NAVIGATING INSURANCE AND OPERATIONS CHANGES in countless ways.
The impact of COVID-19 has been significant to the adventure and entertainment industries. As of May, the travel trade experts at Arival stated that the destination activities and attractions industry was down 85 percent in bookings in 2020 compared to 2019. It will take months, if not years, for business to return to pre-coronavirus levels. And operations will look much different for the foreseeable future. As you reopen for business and volume grows, there are three key areas of focus for your insurance program and related operational changes. They are: • Survival and Cost Reduction • Reopening Your Facility • Insurance Post-COVID
For example, if you reduce revenues from $2 million to $1.5 million, that should reduce the premium by 25 percent. You may be able to apply the difference as a credit for upcoming premium payments.
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As your business has been turned upside down over the past three months, you will want to put your insurance program in “survival mode” to reduce costs. Here are our top five recommendations on where to adjust your program during COVID-19:
Reduce annual payroll projections for workers’ compensation. Just as your general liability is based on sales, your workers’ compensation insurance is based directly on payroll. You should look at your payroll levels on your workers’ compensation policy and revise them to more accurate projections. Subsequently, your workers’ compensation premium should shrink.
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Reduce annual sales projections for general liability. Your general liability insurance is based on gross sales. This number should be revisited and revised. The result will be a reduction to your general liability premiums accordingly.
Code for Payroll Protection Program (PPP) and workers’ compensation. Depending on your state, you most likely are going to be allowed to code PPP payroll (payroll for non-working employees) so that you are NOT charged work-
SURVIVAL AND COST REDUCTION
BY CAMERON ANNAS and RUTHIE LILE, Granite Insurance
ers’ comp premiums for that payroll. This can add up to a significant amount. Some of your class codes’ rates are in the 5 to 10 percent of payroll range. You should adjust this and track this payroll separately under class code 0122. This will notify your workers’ compensation carrier to exclude this payroll from premium calculations.
4 Change class codes for employees working at home. Some of your employees prior to COVID had a job function that may have been a higher risk (guides, amusement, etc.). However, these employees may be working from home right now. By changing their class code to clerical (8810) you will be able to change their workers’ comp rates from 5 to 10 percent of payroll, if in the amusement or guide class code, to 0.15 percent in the clerical class code. A huge difference!
5 Autos on lay-up. Most insurance companies are allowing you to put your vehicles on “lay-up,” which essentially removes the premium for those vehicles for a designated time period (30 to 90 days, say). The agreement is that these vehicles are stored and not operating,
57 Summer 2020
The impact of the pandemic will play out
