Current State of Coronavirus and Insurance

March 1, 2021
Briana Contreras

As the world remains to try and reach a normal with vaccines finding their way into people’s arms, the insurance industry is trying to do the same by this spring.

As the world remains to try and reach a normal with vaccines finding their way into people’s arms, the insurance industry is trying to do the same by this spring.

The COVID-19 pandemic posed numerous challenges to insurers and policyholders. From event cancelations and travel insurance confusion to challenges underwriting and pricing new policies, the pandemic threw obstacles in the way of insurers that are only now beginning to be cleared.

Based on a report by InsuranceQuotes.com, some of the ways things are returning to normal as well as many challenges that still stand in the way are shared below.

Health Insurance and COVID-19 Vaccines

Passed last year by the CARES Act is COVID-19 vaccines are generally covered at no cost to the patient, with a few question marks. When it comes to Medicare, Medicaid, CHIP, and other federally provided health plans, there is no question that the shots are offered at no cost to the patient. If the patient has an Affordable Care Act-compliant policy, again, vaccines would be covered at no cost to the patient.

The question mark comes in when someone has a plan that is grandfathered in under the ACA, or that is not regulated, such as a short-term health insurance plan. In some cases, states are requiring those plans to cover the costs of the shot, but others may not.

Thanks to federal regulations, uninsured patients will also have access to no-cost COVID vaccines as long as the pandemic is a declared national emergency. Healthcare providers just need to apply for reimbursement from the federal government.

But one potentially problematic area for uninsured patients is the rare instance where someone might be on the hook financially if they are uninsured but have a severe vaccine side effect.

That is because under federal law, you essentially can’t sue anyone for vaccine side effects. The vaccine manufacturer is protected by a liability shield, and the FDA can’t legally be sued for approving the vaccine. Your employer likely can’t be sued for making you get vaccinated either. Luckily severe side effects are rare.

On the other hand, moving into 2022, health insurance premiums are going to be a challenge to properly price. That is because since so many people deferred preventative care, the industry is likely to be faced with a flood of claims later this year as people become more comfortable with leaving the house.

Others will be suffering from worse overall health because they didn’t take care of those preventative procedures, which might also lead to higher healthcare costs in the long run. Those factors will both be on insurers’ – and regulators’ minds when it comes time to set rates again later this year.

A Good Time to Get Life Insurance

Life insurance was mainly impacted by COVID-19 because of lockdown orders that made paramedical exams used for underwriting impossible. Since nurses couldn’t go to applicants’ houses, they couldn’t get the health information needed to properly price the policies.

Many companies switched to no-exam options. The problem with that, though, is that premiums tend to be higher than if the insurer has access to accurate underwriting data. Some are still offering those no-exam policies. But many are getting back to the traditional in-home paramedical exams if they are allowed in the local area the policy is being purchased.

Some policies put temporary restrictions on some age groups – say older than 70. Others put in restrictions that if you traveled to a COVID-19 hot spot you had to go through an extended waiting period until after the policy kicked in.

However, term life insurance prices are at historic lows and remain a tremendous deal compared with historical prices.

Challenges for Extending Unemployment Insurance

When the pandemic sparked shutdowns across the economy, businesses nationwide had to shut their doors, and in many cases lay off their work force. Those workers looked to their oftentimes anemic state unemployment payments to help bridge that gap.

Due to most state systems paying dimes on the dollar of what employees used to earn, Congress authorized a boost in those checks as part of the CARES Act. When those funds ran out, former president Donald Trump tapped into FEMA dollars to offer less generous subsidies to help bridge the gap, the report said. Then, more recently in January, Congress again authorized a $300 federal boost that is scheduled to expire some time in March.

Now, Congress and President Joe Biden's administration are negotiating yet another stimulus check which will authorize an extension of federal unemployment subsidies – at $400 per week until at least August. There is no final legislative language yet, but lawmakers hope a final bill can be passed by the earliest this month.

However, as workers would receive this additional federal aid, questions still remain regarding unemployment insurance and what is going to happen to the state unemployment insurance trust funds.

Most of these trust funds are running out of cash. If the states are left on their own to replenish the trust funds, most statutes require businesses to pay an increase in their payroll taxes, adding more of a burden on already struggling employers.

While the stimulus bill that is currently being negotiated does include aid for state and local governments at this point, no money is specifically set aside to help soften that blow.

Other challenges or improvements include:

  • Business insurance claims are still lagging behind.
  • Travel insurance is now an option, but travel is still limited.
  • Seeking liability in 2021 for businesses, schools, venues and more.
  • The future of policy premiums toward losses or disasters will likely go up for many lines.

Other Types of Insurance Policies

Early in the pandemic, people stopped driving, and fewer miles driven led to fewer auto insurance claims, which led to lower insurance premiums. Some auto insurers responded by lowering premiums. Others sent rebate checks.
But, as people have begun to travel and commute again, those breaks have also begun to expire.

If people are working from home now instead of commuting, this may be a great opportunity to try a telematics device. Those are devices that the insurance company sends to you that you insert into your vehicle’s diagnostic port. They monitor things like hard stops, fast acceleration and how late you drive. They use those factors to offer discounts to lower-risk drivers.

If you are commuting to your living room instead of an office building, those fewer road miles may translate to lower auto rates.

Working from home may also pose a challenge for homeowners’ policies. Just telecommuting is no problem, but if working from home means that customers are now visiting your house, that may translate to higher homeowners’ rates, or even specific exclusions put in place by standard homeowners’ policies. Make sure to communicate with your insurer if you are now seeing customers in your home, because if you neglect to tell them and then someone slips on your welcome mat, you may be sued without liability coverage.