Insurance Perspective

Kristin Erickson Tonry Insurance Group, Inc.

The COVID-19 Questions: Underwriters’ Reactions to COVID-19 and What to Expect

As I write this article, Massachusetts is in Phase 2 of its re-opening, which can be scary and involve many changes. These changes will have an effect (one way or the other) on productivity, people, expectations, cost, safety, and the list goes on. With all of these changes comes, guess what, an increase in risk. While most insurance companies have appeared to be quietly assessing the climate and showing support for their clients, don’t get too comfortable – the underwriters are scared too and more underwriting information will be requested. This applies to both insurance and bonds. Underwriters are beginning to ask what I’ve come to term, “The COVID-19 Questions.” They are great questions. The problem is that most of us do not have the answers.

Some are easy:

Did you receive a PPP loan and, if not, have you or do you plan to apply for one? That’s pretty easy. If yes, how much did you receive? OK, also easy.

But then it gets a little harder…

Are you meeting the terms of forgiveness or will a portion of it become a loan? (Well, we think so, but the rules keep changing.)

How about this one:

Did you or do you plan to lay-off or furlough any employees as a result of COVID-19? (Well yes, but no, but then yes and well, it depends.) Attractive unemployment benefits, availability of childcare and insecurity returning to work are all working against us.

And another:

Is your business currently operating at less than full capacity? At what percentage is the business operating? How long can the business remain at this capacity level? (What is full capacity now? Expectations are changing. Adequate PPE is tough to find. Social distancing impacts productivity. Implementing safety measures is costly. Again, what is full capacity?)

And harder…

As of the current date, what is the anticipated cash inflow or outflow from operations from the next three months? Does the business have access to additional liquidity through credit facilities or other sources? Is the company in compliance with debt covenants? If not, have waivers been obtained?

Please provide a current work-in-progress schedule with adjusted estimated costs and completion time as a result of COVID-19 restrictions.

And, when can we expect to receive the fiscal year end statement followed closely by a current interim? continued on page 49

Custom and Standard Concrete Products... Our Specialty!

United Concrete Products, Inc.

173 Church St. Yalesville, CT 06492

www.unitedconcrete.com

Offering a full range of products: Manholes, Catch Basins, Septic Tanks, Leaching Chambers, Dry Wells, Distribution Boxes, Pump Chambers, Grease Traps, PreTreatment Tanks, Utility Vaults, Meter Pits, Yard Drains, Box Culverts, End-Walls, Wing Walls, Curbs, Water Quality Structures, Prefab. Pump Stations, Storage Buildings, Dugouts, Concrete Barriers, Cable Concrete, Retaining Walls, Restroom Buildings, Telecommunication Shelters, Prestress Bridges, National Grid, Traffic Control Structures and many more.

Toll Free: (800) 234-3119 Fax: (203) 265-4941

Jason Lindsey

jlindsey@unitedconcrete.com Cell 203-464-7667 See our full line of products at: www.unitedconcrete.com

Insurance Perspective continued from page 47 • This is what we’ve done so far.

Bond underwriters are not the only underwriters • We are working on this. asking these questions. We recently received these • We are prepared to do this, if necessary. from a major insurance company to bind coverage on • We meet (insert how often) to review and reevaluate. a management liability policy: • We will let you know of any major changes. Over the next six months, do you anticipate a ma terial change in the demand for your products/servic Please place value and trust in your es? If so, how are you addressing the impact of these relationship with your insurance agent changes? How do you project that your profitability and the companies they represent. Do will be impacted? your best to answer the questions and

Do you anticipate any significant supply chain understand the reasons they are being disruptions, order cancellations or near-term financial obligations that you may need to renegotiate, defer, asked. An open and collaborative partor for which you will need to find alternate suppliers? nership with your agent and underwriters Are there contracts that you will need to terminate or will serve you best in the long run. n renegotiate? If so, provide details.

Do you have a succession plan in place to maintain continuity among key managers and directors/officers? Also, do you have contingency plans such that employees can work remotely if necessary?

If changes in workforce have occurred or will occur, what loss mitigation steps are in place? Did the company engage outside counsel to assist with any reductions in workforce?

Have there been any changes to your communication strategies with interested parties (clients, donors, employees, the public, vendors/suppliers) or other public statements as a result of COVID-19? If so, please explain or provide sample.

What guidance is being offered to employees regarding COVID-19? Is the Company offering paid sick leave to its employees? Are employees not being paid?

How has or how will the Company respond to an employee who has tested positive with CO VID-19? 625 Pleasant Street Watertown, 625 Pleasant Street Watertown, The flexibility and understanding we saw during the first few MA MA. . 617 617 - - 924 924 - - 3673 3673 months of battling COVID-19 is starting to wear off. And, rightfully so. Like you, the underwriters need watertownford.com watertownford.com to set expectations and consider worst-case scenarios. Please be prepared to answer the questions with simple and factual answers: SALES SALES ––SERVICE SERVICE ––PARTS PARTS ––CAR & TRUCK RENTAL CAR & TRUCK RENTAL

MATERIALS AVAILABLE FOR PURCHASE:

• 1” MINUS PROCESSED GRAVEL • ¾” & 1½” CRUSHED STONE • SCREENED LOAM • SCREENED SAND

MATERIALS ACCEPTED:

• BROKEN ASPHALT • NON & REINFORCED CONCRETE • CONCRETE WITH WIRE MESH • ROCK • BLASTED LEDGE

NOW AVAILABLE: BOSTON GRAVEL

PLANT LOCATION:

200 LEGACY BLVD. DEDHAM, MA 02026 Plant: 617-590-0024

OFFICE:

1039 EAST STREET DEDHAM, MA 02026 Office: 781-329-4111 Fax: 781-329-1039

HOURS OF OPERATION: MONDAY-FRIDAY: 6:30 A.M. – 4:00 P.M. SATURDAY: 7:00 A.M. – 12:00 P.M.

DELIVERIES AVAILABLE ON LARGE ORDERS. PLEASE CALL FOR PRICING.

TACKLE ANY SIZE JOB HEAD ON.

Offering dozens of quick-change attachments, Ditch Witch ®

compact utility equipment performs an amazing number of chores with the kind of power that outperforms the competition. These low-maintenance machines provide the versatility and long-term reliability that rental companies and general contractors demand. Your demand is our command. WE’RE IN THIS TOGETHER.

CALL FOR A FREE DEMO.

www.jescoditchwitch.us

South Plainfield, NJ // 118 St Nicholas Ave. T: 908-753-8080 // F: 908-753-7853

Shrewsbury, MA // 508-719-0200 Deer Park, NY // 844-482-0910 Middletown, DE // 302-376-0784 Fairfield, NJ // 973-227-2221 Beacon, NY // 845-831-1800 Lumberton, NJ // 800-241-7070

©2018 The Charles Machine Works, Inc.