2. Have directors tested the appropriateness of their business continuity plan on:
a. their employees;
b. their supply chain;
c. the financial condition of the business.

3. Have the directors continued to communicate clearly and timeously with internal and external stakeholders throughout the pandemic?

4. Is it possible for the Board to maintain standard risk / operational controls and procedures during the current pandemic? If not, how have they been operating?

5. Have any COVID-19 related circumstances (including work from home arrangements) impacted continuous disclosure controls and procedures?

7. What is the company’s current cash position like?

8. If current conditions persist or deteriorate, when will you need access to additional capital or funding support?

9. What are your current debt covenants and how is the business positioned in relation to continuing to meet them?

10. Is the current business continuity plan time limited or is the alternate operating approach one that the directors can operate under indefinitely?

Some of the key concern areas for underwriters and where we might see potential D&O claims arise include: inadequate or poor continuous disclosure, employment or occupational health & safety concerns, and cyber & privacy risks.

• Cannings Purple – COVID-19 and communication

• ASX – Listed Compliance Update (31 March 2020)

• Were the appropriate risk management tools used when setting staff up to work from home?
• Just because staff are physically distanced from the office have all company policies still been prioritized and communicated to staff?

• Have redundancies/standing downs or variations in terms of employment all been conducted with due regard to the applicable legislation modified by any Federal variations?
• What work health and safety procedures have been implemented to continue to manage COVID-19 related risks in the workplace (whether remote working or back in office)?

The Board will need to have examined any exposure which may arise due to potential differential treatment of staff during the pandemic.

• Have Boards taken the appropriate steps to ensure that staff are aware of their responsibilities online?
• Have appropriate security and privacy safeguards been installed?
• Has appropriate staff training been undertaken to make staff aware of heightened risks during the period of remote working?

Please refer to our Cyber Insurance during COVID-19 page for more details here.

Directors duties are never under more scrutiny than during a crisis and unfortunately, this is where failings in procedures can be exposed. However, where Boards have acted swiftly and demonstrated clear and effective direction to staff and stakeholders alike, they will be placed in a stronger position during their insurance renewals.

Each insurer has released their own statements on specific dates that cover may be restricted, so we advise to contact your relevant service provider to confirm this on a case by case basis. We have included links to the insurers KBI commonly use for Corporate Travel policies:

• AHI Travel Insurance Statement
• AIG Travel Insurance Statement
• Chubb Travel Insurance Statement
• Liberty Specialty Markets Travel Insurance Statement

If a travel cancellation or disruption loss does occur, look to contact your travel agent or the airline (before submitting a claim) to seek a refund or make alternate travel plans based on existing bookings. If unsuccessful and you are still in a loss position, contact your insurance provider to submit a claim along with the original and amended itineraries, plus any supporting documentation to substantiate this loss.

As always, each claim will be considered on its merits considering the individual circumstances of the claim and the terms and conditions of the policy from all insurers.

Regarding existing policies, it might be advisable to renew this at a minimum premium for continuity of cover (which will have restricted cover) or if you are still undergoing certain travel (i.e. FIFO), then add the additional trips “mid-term” once restrictions have been lifted. We also recommend carefully considering your declared annual trip projections, as this will directly influence the renewal premium.

For the best or most relevant advice on any of the above, it is recommended to contact your insurance provider as each circumstance and policy might be very different.

• Smartraveller – Latest News and Updates for travellers

• Australian Government Department of Health – Coronavirus (COVID-19) advice for travellers

Business Interruption insurance is typically triggered when a Property Damage loss leads to a drop in revenue or additional expenses. If the business’s ability to generate revenue is negatively impacted by the loss, or they incur additional expenses (i.e. move to a new location, temporary costs to supplement loss of machinery, etc.) the Business Interruption section will come into effect.

Most commercial property policies provide an element of cover for business interruption that is caused by an infectious or contagious disease. However, there is no cover for any disease declared to be a “quarantinable disease” under the Quarantine Act 1908, and/or falls into the Biosecurity Act 2015. This link to the Department of Health provides a list of human diseases noted under the Biosecurity Act.

If the infectious or contagious disease does not fall into the above, each insurer will still have specific criteria that need to be met. We have summarised these criteria below, but each insurer will be a little different.

• a Government Authority ordering closure of a location due to unsanitary conditions;
• an outbreak of an infection or contagious human disease occurring within a radius the insured location (usually 20km);
• a result of injury, illness or disease caused by consumption of food or drink supplied from the contaminated location; or
• the result of a murder or suicide at the location.

Each policy wording must be checked on a case by case basis, however almost all will exclude any claim made as a result of COVID-19 impacting a business operation.

Although our movement has been restricted due to COVID-19, opportunists could unfortunately view this situation as a chance to cause damage in other ways, such as:

• Theft of copper piping and other valuable fixtures
• Vandalism such as graffiti and broken windows
• Drug users or squatters moving in, subsequently causing damage, and refusing to leave

However, as more retail tenancies are sitting empty it is important for landlords and owners to understand the risks associated with empty/inactive tenancies.

• Weekly inspections?

Insuring a vacant commercial property under normal circumstances requires you to meet certain criteria: the property must be professionally managed through an agency and must be inspected regularly (sometimes weekly) to maintain insurance cover. While these are not hard and fast rules during COVID-19, outsourcing management through a professional agency and inspecting at regular intervals to monitor its condition and security is still recommended.

• Security

If possible, we recommend increasing both interior and exterior security, including additional physical measures and patrols. Ensure alarms are constantly monitored and that any external security lights are in working order and remove/secure any valuables on site (i.e. cash or keys)

• Fire Protection

Fire systems (i.e. sprinklers, fire alarms, extinguishers, and hose reels) should continue to be serviced and maintained in accordance with appropriate standards. Ensure all fire protection equipment is operational and linked to a monitored source.

• Plant and Equipment

Shut down or isolate any plant or equipment that is not in use or contains flammable liquids or gases (where possible). Isolate any gas, electric or water supplies that are not in use and purge any vapours to reduce fire hazards.

• General Maintenance

Manage any excess materials that may build up around the premises, such as rubbish bins, wooden pallets, or other combustibles in the vicinity of the building. Also, check the roof or gutters for any clogging or signs of damage and that the overall condition of the building is good.

• General Hygiene

The following is likely being carried out at all locations, however, we recommend reinforcing the importance of hygienic practices at a location. We highly recommend the following procedures are clearly laid out, perhaps with signs or posters at your property to remind workers and others of the risks of COVID-19 and the measures that are necessary to stop its spread:

• Allow staff to work from home where possible (relevant to employers more than property owners).
• Ensure physical or social distancing of 1.5m between people.
• Encourage frequent handwashing and provide hand sanitizer wherever possible.
• Ensure the building is regularly cleaned and disinfected.

While we strongly recommend carrying out the above to risk manage your property, the current COVID-19 situation may prevent some of these being done. In this case, we recommend notifying your insurer if any fire, security or general maintenance cannot be carried out as per normal to prevent any issues should a claims scenario occur.

Other considerations

With the reduction of business operations across multiple industries, it’s worth considering backing up your suppliers as certain services/supplies are not readily available. Also, have an emergency contact to hand should an after-hours incident occur and make sure all relevant people have these contact details to hand.

The easiest way to explain this is through an example, so we will use a Commercial Property owner providing rent relief to all tenants.

• Rental Income is reduced by 50% through rent relief.
• The insured Rental Income value is reduced, and a slight premium refund is given.
• Building suffers a catastrophic claim and tenants are unable to operate for 24 months.
• During COVID-19 the Owner receives this reduced Rental Income figure.

• COVID-19 situation ends 6 months from now, businesses return to paying 100% rent.
• The Landlord is under insured and Rental Income Coverage is exhausted in 12 months.
• Rental Income is not received for the final 12 months of repairs as the insured limit is exhausted.

While there is a potential for short term savings, there is also a potential for long term crippling income losses. The risk of reducing income is not as detrimental for annual Public Liability policies but seek advice from your insurance provider before considering this. Our recommendation would be to reduce the Rental Income only if a tenant is vacating on a permanent basis e.g. break lease or if they have ceased trading entirely.

• Chubb – Chubb COVID-19 Unoccupancy Guide
• LIU – LIU COVID-19 Unoccupancy Guide
• Zurich – Zurich COVID-19 Unoccupancy Guide

Stay safe everyone!

• Premium Funding

We have worked with our premium funding partner, IQumulate, to lower their interest rate and extend their payment terms during this difficult time. This will help make the option of monthly payments more viable for clients.

• Payment Deadline Extensions

We can extend our policy payment period beyond our standard terms of 14 days, while some insurers are also willing to extend their payment terms to give companies that are cash strapped more time to make policy payments.

• Forecast Adjustments

If you are not operating or have significantly downsized, several of the insurers are willing to revisit forecasts used to establish their premium rate. This includes wage estimates for workers compensation policies and revenue estimates for liability policies.

• Limit Adjustments

If you need to adjust your coverage limits, the insurers will be accommodating and provide pro-rata return premiums for these changes. We will then expedite these refunds to get them to back to you as quickly as possible.

• Policy Period Extension

Some insurers are willing to extend their policy period on renewal, to allow clients more time to assess any changes to make or if the policy is still required.