Covering Coronavirus: Risk Considerations

EPIC Risk Advisory Bulletin

Volume 2, Issue 7

In this issue, we take a focused look at:

1. Supply Chain and Business Risks
   • FMCSA Waivers Expire May 31
   • Roadcheck 2021: May 4 – 6
   • Are “Ever Given” Events the Wave of the Future?
2. Insurance Products and Coverage Information
   • Cyber Attacks Put Healthcare in the Crosshairs
   • Property Insurance Bill in CA Could Impact Insurers
   • Business Interruption
   • Presumptive Compensability
   • News of Note
3. Human Resources and Employee Benefits
   • Could a Vaccine Passport Work in the U.S.?
   • How the Pandemic is Changing the Workforce
   • New CDC Guidelines for Cleaning Surfaces
   • CDC Gives Fully Vaccinated People Green Light to Travel Again
   • Insights from Across the Firm

The information presented here is intended to provide a high level overview of critical areas of concern for businesses around coronavirus. Consult your EPIC insurance broker for more in-depth guidance.

Supply Chain & Business Risks

FMCSA Waivers Expire May 31

To provide flexibility to Commercial Motor Vehicle operators in light of the coronavirus pandemic, the Federal Motor Carrier Safety Administration (FMCSA) announced in February that several waivers would be extended pertaining to the exemption for delivery of critical supplies, expiring Commercial Driver’s Licenses (CDLs) and Commercial Learner’s Permits (CLPs). Those waivers are now set to expire on May 31, 2021.

FMCSA Extension of Expanded Modified Emergency Declaration

This declaration continues to provide regulatory relief only to commercial motor vehicle (CMV) operations providing direct assistance related to the pandemic and is limited to the transportation of:

• Livestock and livestock feed
• Medical supplies and equipment related to the testing, diagnosis and treatment of coronavirus
• Vaccines, constituent products, and medical supplies and equipment including: ancillary supplies/kits for the administration of vaccines related to the prevention of coronavirus
• Supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of coronavirus, such as: masks, gloves, hand sanitizer, soap and disinfectants
• Food, paper products and other groceries for emergency restocking of distribution centers or stores

Direct assistance does not include routine commercial deliveries, including mixed loads with a nominal quantity of qualifying emergency relief added to obtain the benefits of this emergency declaration.

Waiver in Response to the Coronavirus National Emergency – For States, CDL Holders, CLP Holders and Interstate Drivers Operating CMVs

This waiver was reissued to extend the validity of CDLs and CLPs. The FMCSA limited the waiver eligibility to drivers whose medical certification or variance expired on or after December 1, 2020. While the FMCSA recognizes that in some states, drivers continue to experience difficulty in obtaining a medical certification or variance and providing it to the State Driver Licensing Agency (SDLA), the Agency must also ensure safety by limiting how long a driver may operate a CMV with an expired medical certificate or variance.

Therefore, the FMCSA did not waive the medical certification requirements for drivers whose medical certification or variance expired before December 1, 2020. Drivers are urged to obtain a new medical certificate or variance as soon as practicable, and SDLAs and medical examiners are encouraged to prioritize drivers in this category for appointments. Drivers whose medical certification or variance expired on or after December 1, 2020 are covered under this waiver until May 31, 2021

Three-Month Waiver in Response to Coronavirus Emergency – For States and CLP Holders Operating CMVs

This waives the requirement that a CLP holder be accompanied by a CDL holder, with the proper CDL class and endorsements, seated in the front seat of the vehicle while the CLP holder operates a CMV on public roads or highways. Under the terms, conditions, and restrictions of this waiver, a CLP holder may operate a CMV on public roads or highways without an accompanying CDL holder present in the front seat of the vehicle, provided that the CDL holder is elsewhere in the cab. In addition, the CLP holder must be in possession of evidence from the testing jurisdiction, including an authorized third-party tester, that the CLP holder has passed the CDL driving skills test, In addition, the CLP holder must have a valid non-CDL driver’s license, CLP and medical certificate, unless the FMCSA waiver noted above applies.

Waiver for States Concerning Third Party CDL Skills Test Examiners in Response to Coronavirus

The FMCSA waived the CDL knowledge test examiner training requirements in §384.228(b)-(c) for certain third-party CDL skills test examiners. This waiver allows state authorized third party-skills test examiners, who maintained a valid CDL test examiner certification and previously completed a CDL skills test examiner training course that satisfies the requirements of §384.228(d), to administer the CDL knowledge test without completing a CDL knowledge test training course.

For more information, contact an EPIC Transportation and Logistics team member.

Roadcheck 2021 is May 4-6. Are you ready?

Roadcheck, the annual 72-hour inspection event first launched in 1988, will occur between May 4th and May 6th in Canada, the United States and Mexico. Roughly 17 trucks and buses will be inspected each minute by Commercial Vehicle Safety Alliance (CVSA) officers to ensure drivers and vehicles meet safety and security requirements. Law enforcement officers will conduct inspections in accordance with their departments’ coronavirus safety and health protocols.

The focus this year is on Commercial Motor Vehicle (CMV) lighting and hours of service. As such, it is important that lights are functional and clean, including the retroreflective sheeting (the red and white “conspicuity tape”) and reflectors. If a lamp, tape or reflector was required at the time of equipment manufacture, it must be maintained as required by §571.108. Under hours of service, there are four key changes that took effect in September 2020.

Download an HOS Visor Card to remind drivers of these changes 

If a driver is placed out of service (OOS), it will cost $861 on average. This does not include the costs of fines or repairs as a result of the inspection. Additionally, being placed OOS is a business interruption that also reduces available drive time and will cause your SMS scores to increase. This can increase roadside inspection targeting and impacts insurability.

Pre-Trip / Post-Trip Inspection Overview

Per §392.7: Equipment, Inspection and Use, no CMV shall be driven unless the driver is satisfied that the required parts and accessories are in good working order. Additionally, according to §396.13: Driver Inspection, before driving a motor vehicle, the driver shall:

a. be satisfied that the motor vehicle is in safe operating condition;

1. check the certification that any required repairs have been performed; and
2. sign the vehicle inspection report as required.

Five Tips To Prepare For Roadcheck

1. Operate clean and well-maintained vehicles. Poorly maintained and dirty equipment attracts the attention of law enforcement and gives the impression of sloppiness.
2. Be sure annual inspection records for all equipment are present. Tractors, trailers and straight trucks should all be onboard and valid.
3. Do a good job with pre-trip and post-trip inspections. Drivers need to open the hood before and after duty to identify any concerns.
4. Ensure records are in order. Drivers must have a valid Medical Examiner’s Certificate, a valid operator’s license with the proper endorsement from the state of residence on their person, and they must be utilizing Electronic Logging Devices unless using exemptions. For those drivers required to have a CDL, be sure they have self-certified to the State Driver Licensing Agency (SDLA), otherwise they may face license suspension.
5. Drive safely. Common violations that result in law enforcement vehicle stops include speeding, following too closely, running a stop sign or traffic control device, failure to use turn signal, improper lane change and handheld cell phone use.

Post-Inspection Roadside Inspection Documentation

Drivers are required to submit the inspection report to the motor carrier within 24 hours. If they are not going to return to the terminal, then they must mail in the inspection. Any violations must be corrected, and then the inspection form must be signed to certify that repairs were completed. It must be sent back to the state of inspection within 15 days, and copies of all roadside inspections must be retained by the motor carrier for 12 months.

For more information, contact an EPIC Transportation and Logistics team member.

Are Ever Given Events the Wave of the Future?

Events like the Ever Given cargo vessel running aground in the Suez Canal, or the ONE Apus stack collapse, which saw 1,816 containers topple overboard after encountering heavy weather near Hawaii, are timely reminders of the need for adequate cargo insurance to cover General Average, or general loss, when it is declared. Without it, cargo owners and shippers run the risk of significant unexpected cash outlay that could impact cash flow, operations and the timely delivery of held cargo. This is because when General average is declared, ocean carriers and cargo owners are collectively responsible for contributing to offset the losses incurred.

As ships become larger, the risk of adverse events potentially leading to General Average situations increases as well. Additional risks to be mitigated with larger vessels include: the potential of compromised maneuverability in high wind situations, higher numbers of onboard fires and lost containers, difficulty with salvage and repairs, and the cascading effect on the global supply chain when adverse events occur. Such risks are top of mind for maritime risk managers, and potentially reinsurers, who absorbed the majority of claims costs related to the Ever Given grounding. Payouts could reach $1 billion, much of which will be covered by reinsurers like Lloyd’s of London, which has said the event could create a $100 million loss for the commercial insurance and reinsurance market.

Contact an EPIC Transportation and Logistics team member for more information.

Insurance Products & Coverage

Cyber Attacks Put Healthcare in the Crosshairs

The healthcare sector remains at greater risk for cyber attacks, even as ransomware payments fell in the fourth quarter. According to a report from Coveware, 70% of ransomware attacks involved the threat of data exfiltration – a cyber attack where a company’s data is copied, transferred or retrieved from a server without authorization. While such attacks used to be rare, they are now increasingly combined with ransomware attacks to extort money from businesses.

Although exfiltration attacks were up, payments were down as more companies expected compromised data to be made public regardless of payment. The average ransomware payment of $154,108 was down 34 percent from the third quarter 2020 average of $233,817. The hope is that over time, as more companies refuse payouts, this type of cyber attack will wane.

A contributing factor could be the U.S. Treasury Department’s advisory last October warning of sanctions on companies choosing to pay ransomware demands. Still, healthcare companies remain at higher risk for such attacks to occur. Emisoft research revealed that 560 healthcare providers were preyed upon by cyber criminals last year.  Email phishing schemes appear to be the leading entry point for hackers to infiltrate healthcare data systems. They have now overtaken remote desktop protocol (RDP) compromises as the seat of most cyber attacks.

Malware like Trickbot and Emotet allow cyber criminals to enact worming capabilities, which attack connected devices on a victim’s network. While Emotet has been neutralized, similar threats remain. Small to medium sized organizations tend to be targeted most frequently. However, healthcare companies can prepare against attacks by backing up data, requiring multi-factor authentication, and educating employees on how to detect and avoid email phishing attacks.

Key recommendations include the following measures:

• Establish and practice out of band, non-VoIP, communications
• Rehearse IT lockdown protocol and process, including practicing backups
• Ensure backup of medical records, including electronic records, and have a 321-backup strategy – three backups on two different media, one of which is offline at all times
• Expedite patching response plan within 24 hours
• Prepare to maintain continuity of operations if attacked
• Check that anti-virus and endpoint detection and response (EDR) are running; a stopped state may indicate compromise
• Be prepared to re-route patients if patient care is disrupted

EPIC’s cyber team has developed a straight-forward Cyber Crisis Guide that captures important reporting information and provides guidance on the necessary steps to take in the event of any incident. The cyber team can also provide consultation and advice on coverage and appropriate limit selection in this complex area.

Both unpatched corporate software and outdated security techniques, as well as emerging risks in mobile and IoT platforms could put your business at risk.

For more information, contact an EPIC broker.

Property Insurance Bill in CA Could Impact Insurers

A new bill moving through the California state legislature could have a significant impact on property insurance. AB 1522 proposes to make it unlawful for insurers to cancel or refuse to renew residential or commercial property insurance policies when such decisions are made solely because the properties in question reside in a high-risk wildfire area.

With so much of the state designated as areas at high-risk for wildfire, and the fire season seeming to lengthen every year, the bill’s impact, if passed, could be significant. While approximately three dozen state bills concern wildfire, AB 1522 is the only piece of legislation of concern to property insurers.

As the bill states, “existing law prohibits an insurer from canceling or refusing to renew a policy of residential property insurance for a property located in a ZIP Code within or adjacent to a fire perimeter for one year after the declaration of a state of emergency if the cancellation or nonrenewal is based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.”

The new bill would expand upon existing regulation by prohibiting insurers from denying renewal or issue for properties in high-risk fire areas, unless other contributing factors are at play.

In a related issue, the California FAIR Plan Association has come out publicly in favor of SB11, which would allow it to write commercial property insurance policies for permanent structures on farms. The bill would provide a last-resort insurance option for farmers in high-risk areas when no other insurer is willing to provide cover. Proposed coverage would not extend to crops.

For more information, contact an EPIC broker.

Business Interruption Update

A year after the onset of the pandemic, more than 1,500 coronavirus-related business interruption lawsuits have been filed in state and federal courts across America. In federal courts, insurers have won an overwhelming number of cases, obtaining full or partial dismissals in 173 of the 188 motions to dismiss filed and adjudicated to date. The situation has been less one-sided in state courts, where policyholders have won motion to dismiss cases 51 percent of the time. When considered together, however; insurers are winning about 80 percent of motions to dismiss.

Currently, hundreds of lawsuits are working their way through state and federal courts. The owner of fitness company is suing insurers in Washington, alleging they should pay $500 million for losses after 1,200 of the fitness company’s employees tested positive for coronavirus. The company argues that the infections are proof of physical damage to its properties, saying “the coronavirus has an continues to physically alter and transform [gym] surfaces into virus-spreading fomites,” and “no amount of routine surface cleaning could remove the aerosolized coronavirus suspended in the air” in the health clubs.

In New Hampshire, a hotel company became the latest to sue insurers for coverage related to coronavirus claims. The company held business interruption and civil authority coverage and reported $80 million in losses due to the pandemic. The insurer claims, as many have, that losses are not covered due to the lack of physical damage to the covered properties. For its part, the plaintiff argues that because its all-risk policy doesn’t specifically exclude pandemics, virus or communicable disease, it should be covered.

Law.com conducted a review of the cases decided thus far, as well as those still pending. It found that whether or not a policy contains a virus exclusion may account for divergent results, where state courts are more likely to decide in favor of insureds than insurers. Insurers win more than 90 percent of the time in federal court. It says, “Of the 268 total cases decided by state and federal courts to date, 111 of them did not involve virus exclusions. Nevertheless, in 80 of those cases, the federal courts still granted motions to dismiss in favor of carriers.”

At least for the time being, the pattern seems posed to hold true in the months ahead. For more information on this evolving situation, contact an EPIC broker.

Presumptive Compensability Legislation

States continue to introduce both coronavirus presumptive compensability legislation and liability shield laws in an effort to deal with the expected flood of liability lawsuits related to the coronavirus.

In California, AB 743 proposes sweeping legislation that would create a rebuttable presumption that coronavirus was present on properties and caused physical loss or damage to properties that have experienced interruptions in their businesses.  Introduced in February 2021, the bill says specifically that rebuttable presumptions would affect the burden of proof in cases where business interruption is alleged to have been caused by the pandemic during a state of emergency.

Further, it would create “certain rebuttable presumptions that coronavirus was present on specified property and caused physical loss or damage to that property which was the direct cause of the business interruption.” This presumption also applies to properties in locations under civil authority orders forcing them to close. Such closures would be considered the cause of physical loss or damage. Civil authority would be defined as “any federal, state or local government, or tribal government.”

The bill would prohibit coronavirus from being construed as a pollutant or contaminant for purposes of any exclusion within an insurance policy unless viruses are expressly included in that exclusion policy language. If passed, the bill would take effect immediately and would be retroactive to all policies providing business interruption coverage on and after March 4, 2020.

As this continues to be an evolving issue, the National Law Review has compiled a helpful list of the state, territorial and local government policies (proposed or passed) in response to the ongoing coronavirus pandemic. It is organized by state and is available online at natlawreview.com.

For more information, contact an EPIC broker.

News of Note

The passage of another two weeks has brought forth more developments across the insurance world. Here is a rundown of recent news stories of interest.

• The Warning Signs of a Longer Pandemic, Axios, April 12
• The Other Reason the Labor Force is Shrunken: Fear of Coronavirus, The Wall Street Journal, April 11
• Coronasomnia is Real and a Pressing Safety Hazard that Employers Must Address, Risk & Insurance, April 9
• WHO wins dismissal of lawsuit in New York over pandemic response, Reuters, April 5

HR & Employee Benefits Insights

Could a Vaccine Passport Work in the U.S.?

A highly contagious COVID-19 variant first identified in the U.K. has been reported in every state in the U.S., causing experts to worry that a surge in cases is coming. President Biden says all adults will be eligible to receive the vaccine by April 19. Yet, it will take months, if not longer, to distribute enough vaccines to inoculate the population to any level remotely approaching the 94% required to obtain herd immunity. The news that Johnson and Johnson should halt distribution of its vaccine after the discovery of rare blood clots forming in those receiving it presents another setback to the elusive goal of herd immunity.

In the interim, vaccine passports have been promoted as a possible way to allow business, leisure and travel activities to return to pre-pandemic levels. While the idea is popular in some states, like New York, and countries, like Britain, other states across the U.S. show great resistance to the idea of having to show proof of vaccination to attend an event where many people are gathered together in close quarters.

The governors of Florida and Texas have issued orders banning vaccine passports from being used in their states, and governors of other states, while not banning them, have said they will not require vaccine passports. The White House itself has said it will not mandate vaccine passports at a federal level. Some businesses and industries, however, are pushing for vaccine passports as a way of generating public confidence in the activities they promote. Airlines, for instance, have pushed for the creation of a Trans-Atlantic Air Bridge that would create a corridor between the U.K. and the U.S. where travelers with vaccine passports would not have to take coronavirus tests or be subjected to quarantine periods.

Vaccinations are on the rise across America, with close to half of states vaccinating all adults, and one third of Americans having received at least one dose of a vaccine. As new variants appear, proof of vaccination could be the only realistic way for certain industries, like live events and theater venues, to resume normal operations. In New York, where the first vaccine passport, Excelsior Pass, is now in effect, Broadway theaters, concert halls, sporting venues and other large group areas may return to normal operations as long as patrons provide proof of full coronavirus vaccination or a recent negative test.

The state touts the pass as similar to a mobile airline boarding pass. It can be stored digitally on smartphones in a free app, or it can be printed and carried on hand in physical form. Businesses and venues in New York can request to scan and validate the pass as a condition of entry.

Depending on the success of the effort, similar measures could roll out in other cities across America where vaccine passports have not already been preemptively banned.

How the Pandemic is Changing the Workforce

As the pandemic wears on, it is impacting the workforce in different ways. A study from Prudential revealed that workers surveyed expect adaptations put in place for the pandemic to become permanent fixtures of office life. Conducted in March, the survey found that 87 percent of American workers who have been working remotely during the pandemic want to continue remote work arrangements at least one day a week. Nearly 70 percent of all workers polled prefer a hybrid workplace.

Those figures are up significantly from a similar survey conducted last fall. Most desirable benefits of a remote work arrangement included flexible schedules and shorter commutes. Those benefits outweighed the negative aspects of isolation and longer work hours for many workers surveyed.

NBC News found that while office buildings are opening up, many workers, particularly in the retail industry, are still hesitant to return. Executives say the pandemic has forced greater work-life balance and afforded more time with children and seniors. Companies looking in to leasing arrangements in larger cities are responding to this trend by seeking longer terms on smaller spaces. The Wall Street Journal reported that rent proposals made during the first quarter of 2021 suggest many companies in markets like New York, San Francisco, Chicago and Los Angeles are pursuing a hybrid model with a smaller physical footprint and more employees working remotely at least part-time.

Another area being impacted by the coronavirus is retirement. More than 3.1 million Americans aged 55 or older now plan to apply for Social Security benefits earlier than originally thought, according to the Census Bureau. This increase is offset by 1.4 million people in the same age group who plan to work longer because of the pandemic. The result is a net increase of 1.7 million early retirements. The shift could result in improved job opportunities for younger workers.

A steady stream of workers, of any age, in increased frequency would be welcome news to businesses serving workers in hard-hit cities like New York, Chicago and Los Angeles. When paired with announcements from Google and Amazon that they have plans to return to the office this year, it seems that some form of ‘new normal’ may be starting to take shape.

For more information, contact an EPIC team member.

New CDC Guidelines for Cleaning Surfaces

The Centers for Disease Control (CDC) has updated its guidance on cleaning and disinfecting surfaces to prevent the spread of coronavirus. It now says that in most situations where there is no known coronavirus exposure, cleaning surfaces with soap and water once a day is sufficient. This replaces earlier guidance to clean hard surfaces with disinfectant sprays and sanitizing wipes.

The Agency continues to recommend disinfection on surfaces where there has been a suspected or confirmed case of the virus within 24 hours. The guidance comes after understanding has been gained over how the virus is transmitted.

While coronavirus can land on a surface, and it is possible for people to become infected if they touch those surfaces and then touch their nose, mouth or eyes, in most situations, the CDC says the risk of infection from touching a surface is low. There is a much greater opportunity for transmission from direct contact, droplets and airborne particles. The CDC continues to recommend frequent hand washing or hand sanitizer after touching potentially infected surfaces. Cases where more frequent cleaning of surfaces apply include:

• High transmission of coronavirus in the community
• Low number of people wearing masks
• Infrequent hand hygiene
• Space populated by people at higher risk for severe illness from coronavirus

Importantly, the CDC’s revised guidelines do not apply to healthcare settings or other facilities where specific regulations or practices for cleaning and disinfection may apply.

For more information contact an EPIC team member.

CDC Gives Fully Vaccinated People Green Light to Travel Again

The CDC has updated its travel guidance for people who are fully vaccinated against the coronavirus. Citing recent studies, the CDC now recommends that fully vaccinated people can travel at low risk to themselves. A person is considered fully vaccinated two weeks after receiving the last dose of a two-dose vaccine, such as Pfizer or Moderna, or first dose of a single dose vaccine, such as Johnson and Johnson.

Fully vaccinated individuals can travel within the U.S. without needing a coronavirus test or quarantine, according to the CDC, as long as they wear a mask, avoid crowds, continue to maintain social distance of six feet from others, and wash their hands frequently.

Importantly, fully-vaccinated individuals must still have a negative coronavirus test result before they board a flight headed to the U.S. from an international location, and many countries require the same upon entry to their borders. The guidance does not alter existing travel guidance for non-fully-vaccinated individuals, who should still get tested one to three days before domestic travel and three to five days afterwards. Non-fully-vaccinated individuals should continue to self-quarantine for seven to ten days after travel and avoid non-essential travel, according to the CDC.

For more information contact an EPIC team member.

Insights From Across the Firm

EPIC thought leaders have written numerous articles on matters relating to coronavirus, all of which are available on EPIC’s website. The most recent articles include:

• Webinar: Emerging Risk in Employment Practices Liability for Professional Service Firms, April 12
• DOL Releases COBRA Subsidy Website and Model Notices, April 8
• Webinar: How A&E Firms are Addressing Mental Health
• New York’s Coronavirus Vaccine Leave Law, April 6
• Return-to-Office Planning for the Next Phase of the Pandemic, April 5
• Joint Agencies Release FAQs Clarifying Health Plan Coverage of Coronavirus Testing and Vaccines, April 1
• Webinar Recording: Are You Ready for an OSHA Visit?
• Market Review 2.0: Cyber Risk, March 31
• Expanded California Coronavirus Supplemental Paid Sick Leave Law, March 30
• New Data on the Opioid Addiction Crisis, March 29

Conclusion

Our understanding of coronavirus and its impact around the world continues to evolve at a rapid pace. This newsletter briefly touches on issues that businesses may want to consider as they approach their response to novel coronavirus. More topics will be considered in future issues as our understanding of the virus and its impact continues to evolve. Please reach out to your EPIC broker for more information.

For all of EPIC’s coronavirus coverage, visit epicbrokers.com/coronavirus 

Disclaimer: This has been provided as an informational resource for EPIC clients and business partners. It is intended to provide general guidance on potential exposures and is not intended to provide medical advice or address medical concerns or specific risk circumstances. Due to the dynamic nature of infectious diseases, EPIC cannot be held liable for the guidance provided. We strongly encourage readers to seek additional safety, medical and epidemiological information from credible sources such as the Centers for Disease Control and Prevention and the World Health Organization. Regarding insurance coverage questions, whether coverage applies or a policy will respond to any risk or circumstance is subject to the specific terms and conditions of the policies and contracts at issue and underwriter determinations. 

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