The COVID-19 pandemic has posed a threat to the health of people and businesses, challenging societies and economies as it has spread around the world.
Many businesses were hit by government shutdown orders or saw dramatic drops in livelihood as populations sheltered in place. Many have been forced to direct their employees to work remotely—sometimes for the first time—increasing such exposures as cyber risks. The pandemic also presents potential challenges across other areas, such as workers compensation or liability exposures.
COVID-19’s impacts on businesses aren’t going away anytime soon. While health experts and governments continue trying to rein in the virus, economies hit by shutdowns to control the spread of the novel coronavirus may take time to recover.
There will be an insurance market impact as well, as a market hardening that was already underway when the pandemic struck may well be deeper and longer as a result of COVID-19.
Indeed, there is no shortage of challenges posed by the pandemic. For many organizations, though, the answers to some of those challenges may be found in captive insurance. As those organizations consider making their way through the current pandemic and addressing the risks posed by similar events in the future, a captive insurance company may be a valuable tool for doing so.
If it can be quantified and it can be priced, I don’t know why one, it couldn’t be written in the captive, and two, you shouldn’t be able to attract some reinsurers to support it.”Brady Young, Strategic Risk Solutions
Confronted with a pandemic, organizations may find that some insurance coverages are unavailable or unaffordable in the traditional market. Those organizations may also be confronted by a changing risk profile or financial stresses. A captive insurance company could possibly help the organization solve those problems.
Captives have long risen to the occasion of solving difficult insurance coverage issues, and they can help address a number of pandemic challenges. Captive owners—or prospective owners—looking to utilize a captive solution to address these issues, however, must do so thoughtfully, keeping a number of critical factors in mind.