By Lenny Giteck
NRRA interviewed Christopher Reed, corporate counsel of the Nonprofits Insurance Alliance (NIA), to find out how his organization is coping with COVID-19, as well as what he thinks the ramifications for the RRG industry will be. NIA is a member of NRRA. Here is what Reed had to say:
How has the NIA been dealing with the COVID-19 pandemic?
We have a robust business continuity plan in place, which has kicked in for the current crisis. I’m happy to say it has worked phenomenally well.
More that 90 percent of our 110 people are now working at home. Those who are going in are essential employees— just to sign checks, do basic technology maintenance, and so forth. That was the whole point of the plan: to enable us to do pretty much do everything remotely.
It’s amazing that you had the foresight to plan for a pandemic.
The plan’s primary focus is earthquakes, fires, terrorism, etc. We’re located in Northern California, so earthquakes are very much something we thought about. However, it easily accommodated this pandemic as it was broad and designed to account for many perils. It therefore very effectively addressed this specific case.
Luckily, most of the elements of the plan aimed at those sorts of eventualities turned out to be applicable to a disease pandemic.
Still, is your organization in jeopardy because of the current situation?
While it is a fluid situation and we are managing it day to day with our contingency plan, there are no known structural threats to our business and there has been no disruption to any of our departments. We are serving our nonprofits without interruption. However, the pandemic is having a major impact on our members.
Many nonprofits provide direct services that cannot be done from home. NIA is a nonprofit that insures other nonprofits. Because of the crisis, we expect that donation to our members will fall off. At the same time, because of COVID-19, many of NIA’s members are being called on to provide a huge increase in services —particularly those providing food and shelter.
We saw something similar in 2008 and many predicted that 10 percent of nonprofits would go out of business. That did not happen and we grew considerably that year. Nonprofits are extremely resilient.
Are you doing what you can to help them?
We always look for ways to help our members, so they can continue to provide essential services — whether to young people, the sick, seniors — whoever needs assistance. Recently we announced that we are eliminating deductibles on certain lines of business, elongating reimbursements for car rentals, suspending finance charges and cancellations for non-pay until June 1.
In addition, the industry is a hard market and many carriers have narrowed their appetite to exclude nonprofit classes or to change programs in other ways that make it difficult for nonprofits to secure insurance. We continue to insure 501(c)(3)s including foster family agencies, animal rescues, residential programs, child-serving organizations and many other types of organizations.
Finally, we have additional ways to help nonprofits including a loan fund from which we can give “bridge” loans to our California members, up to $50,000. And we added $500,000 to our Gilbert Fund that provides grants to help with immediate needs such PPE, video conferencing, medical equipment, carbon monoxide detectors, plumbing repairs, etc.
What about the insurance industry as a whole? What impact do you see the pandemic having?
I think COVID-19 is likely to result in a whole new category of insurance: coverage for just this kind of disease emergency. Face it, once COVID-19 is over with, another deadly virus could come along at any time.
In the event of an interruption in the ability to conduct business, policies today only cover damage to property. In fact, many policies specifically exclude viral and bacterial diseases.
In my view, there’s going to be an enormous demand — from business, regulators, and government — that the insurance industry create new solutions for the kind of thing we’ve experiencing now and it is likely to require government backup similar to the TRIA program for terrorism coverage or like the Federal Flood Insurance program
What role will RRGs have in that regard?
RRGs tend to be very nimble and have extensive expertise and data for the classes of business they underwrite. They will do what they need to fill member needs.