13 July 2020Actuarial & underwriting

COVID-19 could lead to increase demand for captives: Sedgwick

Captives are set to increase their role in providing coverage for organisations that have found themselves lacking in coverage or underinsured in the aftermath of the COVID-19 pandemic.

That is the view of Marcia Giesler, affinity business development director, and Tom Hebson, managing director of captive and programme affinity, at Sedgwick. Speaking on a Sedgwick podcast, Giesler and Hebson predicted companies may create something that wraps around a communicable disease endorsement, or plug gaps in their business interruption coverage.

In the last few months of COVID-19 exposure, many employers have revisited their policies to identify potential coverage gaps, they said. “Multiple types of exposures are hitting risk managers’ desks and employers hope that they have coverage, but they also understand that in some cases, they’re going to have to find alternatives in the future.”

Sedgwick noted that many carriers have asked it to track activity coded for COVID-19. By capturing and tracking the COVID-related reported losses of its clients, and maintaining a database, its captive clients will be better placed to address their risk appetite in the future, it said.

Companies need to understand who’s coming and going in the workplace, and need to track where specific exposures are coming from, said Sedgwick. “This is part of the overall safety strategy and back to business strategy, as it reassures employees that the company is keeping a close eye on their surroundings and that all the safeguards are in place.”

This is particularly challenging for companies with operations spread across multiple offices, especially where those operations are governed by different regulations, Sedgwick added.

“Between state and local regulations, governors’ executive orders and the federal government, information is coming to employers from all directions,” it said. “For employers of all industries and all sizes, keeping track of the changes, understanding what rules are required, and determining how to enforce them, is clearly a challenge.”