Update as of Date 30 November 2020
In the continuing fight against COVID-19, there is hope on the horizon. New therapies continue to emerge, and three promising vaccine candidates are nearing approval. However, there are still hardships ahead. The healthcare industry continues to face significant headwinds as shortages of Personal Protective Equipment (PPE) and hospital capacity have increased the attention and scrutiny on the industry. As a consequence, whistleblower activity and the litigation and fines that follow, are on the rise. In the UK a second lockdown has arrived, inflicting a second blow to cash strapped Small & Mid-Sized Enterprises (SMEs), likely pushing insureds to seek additional recoveries via insurance. As the judicial system has demonstrated so far, the insured’s ability to make recoveries, and the corresponding ability of insurers to aggregate new losses with the losses that resulted from the first lockdown, will be determined by the UK courts. Below, the BMS Group COVID-19 team has summarized how COVID-19 continues to impact our world.
Since the beginning of the pandemic there has been extensive research into the development of a vaccine. An announcement on Nov. 9 by Pfizer and BioNtech has raised hopes that a safe and effective vaccine might be widely distributed soon. The vaccine candidate proved to be over 90% effective in preventing COVID-19 in the first term efficacy analysis, and no safety concerns were observed in a study involving over 40,000 diverse individuals. Pfizer and BioNTech expect to produce 50 million vaccine doses in 2020 and 1.3 billion doses in 2021; they have committed to provide 300 million doses to the U.S. in 2021, 200 million to the EU, 120 million to Japan and 30 million to the U.K., with more promised to Canada and other countries. In response to this announcement, the stock market surged. This was felt particularly strongly by harder-hit industries like oil and airlines: Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell PLC saw increases of 12.7%, 11.6% and 13.4%, and Delta Air Lines Inc., American Airlines Group Inc. and Deutsche Lufthansa AG saw increases of 17.0%, 15.2% and 19.5%. Since Pfizer’s announcement, drug makers AstraZeneca and Moderna have announced their own vaccines. Based on late-stage trials, AstraZeneca’s vaccine is 90% effective and Moderna’s is 95% effective, and annual production capacity for these vaccines currently stands at two billion doses and 1 billion doses, respectively.
While the news of a vaccine is very promising, there are a few things to keep in mind. First, the vaccines still need to be approved: as Adam Vettese, analyst at multi-asset investment platform eToro, wrote in an email, "While this is obviously a positive step forward, there is still a long way to go. Pfizer will only be able to submit its vaccine for emergency use once two months of data has been collected.” Furthermore, all of the vaccine candidates are administered in two doses over a roughly one-month period. Therefore, two doses of the vaccine will be required per person, effectively doubling the capacity needed for global inoculation, and individuals will need to adhere strictly to standard COVID-19 protocols like social distancing and mask wearing for the duration of the vaccination process. Additionally, both the Pfizer and Moderna vaccines must be stored at very low temperatures, which will make long-term storage unfeasible at most locations.
In addition to the progress that has been made towards a vaccine, there continue to be developments in COVID-19 therapies. On Nov. 9, the antibody drug bamlanivimab, which was developed by Eli Lilly and Co., was authorized by the FDA for emergency use. Cantor Fitzgerald analysts stated following the authorization, "Despite Pfizer's overwhelmingly positive efficacy data today, we think Pfizer is still about half a year away from a [biologics license application] filing for its vaccine, so COVID treatments like bamlanivimab are needed now and into next year."
Legislative consequences of COVID-19 continue to emerge and pose challenges to various industries. In healthcare, whistleblower activity has been on the rise and has resulted in increased litigation and fines. The number of whistleblower claims made to the Occupational Safety and Health Administration have risen 30% compared to pre-COVID-19 levels. Nursing homes and Veterans Affairs facilities have been particularly affected. The resulting OSHA citations can cost these facilities tens of thousands of dollars, and the accompanying reputational damage and litigation pose a serious financial threat. Unfortunately, OSHA has yet to issue clear standards which has made it difficult for healthcare employers to determine what actions or inactions can result in receiving a citation. In general, the two scenarios that are associated with the receipt of a violation are a failure to institute and comply with a comprehensive respiratory program and a failure to report hospitalizations of employees for COVID-19. Due to the significant financial damage that can result from a whistleblower, those who choose to speak out are at risk of significant backlash. To address this, some states and cities, including New York, Colorado, and Philadelphia, have enacted protections for whistleblowers.
Legislative decision making on Business Interruption insurance also continues. In the UK, a second lockdown is ongoing. Consequently, many businesses are seeking to make claims on their BI policies. As of Nov. 16th, the UK Supreme Court has begun hearing the appeals of the Financial Conduct Authority, Hiscox Action Group, and Insurers to determine if coverage is available. It is expected that there will not be extensive deviation between a business’ recoveries from the first lockdown and its recoveries from the second, as long as its BI policy did not include a low sub-limit or a maximum claim period. However, it is not clear how this will translate to an insurer’s associated reinsurance recoveries. There is an ongoing debate surrounding the aggregation of COVID-19 losses. In particular, it is unclear whether or not COVID-19 can be considered as a single event for event-based aggregation or as a single cause for treaties permitting aggregation of a series of losses arising out of one cause. Furthermore, due to a lack of clear authority on the meaning of “catastrophe” in UK law, there is uncertainty as to whether COVID-19 losses can be aggregated on a Catastrophe basis. The possibility of such aggregation will certainly be dependent on the treaty structure in question: for example, it is unlikely that catastrophe aggregation will be possible on a treaty with an hours clause.
Although COVID-19 continues to pose challenges to various industries and to societal well-being, there is reason to be hopeful: the approval of an effective vaccine could be right around the corner and the stock market has enjoyed a boost. However, we should temper our expectations with the knowledge that nothing will make the virus disappear overnight. BMS Re will continue to monitor developments and keep you informed.
Covid-19 Resources
For more information and access to the articles that assisted in creating this COVID-19 Impact Analysis summary please refer to the resources linked and or embedded below.
Dashboards updated in real-time
National Patient and Procedure Volume Tracker Report
A new analysis from data scientists at Strata Decision Technology (Strata) using the company’s newly launched National Patient and Procedure Volume Tracker™ reveals that hospitals are experiencing significant volume drops in key service line areas.
National Patient and Procedure Volume Tracker and Report Weekly Update.pdf
Facebook’s Good Mobility Dashboard
A mobility dashboard that aggregates information on people's movements from a conglomerate of private companies, as well as public resources like satellite imagery and census data to compare movement trends across different states dating back to March.
Apple Mobility Trends Dashboard
Apple has released a mobility tracker that uses data from Apple Maps to show how much people's movements have decreased. Apple's report allows for comparisons of country-wide data, as well as data from some major cities.
Google Mobility Reports (National, State, and County Level Data Available)
These Community Mobility Reports aim to provide insights into what has changed in response to policies aimed at combating COVID-19. The reports chart movement trends over time by geography, across different categories of places such as retail and recreation, groceries and pharmacies, parks, transit stations, workplaces, and residential.
Rt.live State by State Infection Rate Tracker
A website dedicated to tracking how fast COVID-19 is spreading across each state in the US “Rt” has been a commonly used metric during the COVID-19 pandemic. It measures the average number of people who become infected by an infectious person. The higher the Rt is above 1.0 for a state, the quicker the virus is spreading. When Rt is below 1.0, the virus will stop spreading.
Health and Medical Lifeline – FEMA COVID-19 Risk Model
Powered by Geospark Analytics, this model assess every US County’s seven day virus spread and the undersupply risk (number of hospitals, beds, and ICU beds). This is a great tool for insurers wondering how hard a specific county has been hit by COVID-19. General extrapolations about reopening economies can be made by understanding the undersupply risk and virus spread numbers.
Impact on Foot Traffic
The interactive graph is updated periodically by SafeGraph, providing an opportunity to see how COVID-19 has impacted foot traffic patterns to public places such as restaurants, bars, airports, and grocery stores.
Homebase’s State of Hourly Work
The spread of coronavirus (COVID-19) is having a devastating impact on small businesses and hourly workers. Homebase, is in a unique position to see this happen in real-time. In the interest of transparency, they are sharing data publicly, so that governments, businesses, and communities can understand and support the people who are most impacted. In addition to daily updates to the datasets, Homebase is surveying workers to understand their experiences and actively refreshing lists of financial resources for small businesses and employees to help people affected by COVID-19 quickly get relief.
COVID Coverage Litigation Tracker
UPenn’s Insurance Law Analytics (“ILA”) conducts empirical research on insurance litigation to inform the resolution of insurance disputes and the development of insurance law. The COVID Coverage Litigation Tracker (CCLT) is ILA’s first research project. CCLT contains data on insurance coverage cases related to the COVID-19 pandemic. The data collected for each coverage case include policyholder name and industry code; insurer name and AM Best number; policyholder and insurer law firms; the court in which the case is litigated; the coverage sought; the type of insurance policy and state of issue; the relevant insurance policy forms; whether class action status is sought and, if so, the alleged class or classes; and information regarding key litigation events.
Arrivalist’s Daily Travel Index
Measures consumer road trips of 50 miles or more in all 50 U.S. states. The data is drawn from a panel of GPS signals representing road trips taken by car. The insights have been prepared to help travel marketers and other industry professionals gauge fluctuations in drive market trips in any of the 50 U.S. states.
Chris Murray Model
Referenced in a White House press briefing as the "Chris Murray Model," the Institute for Health Metrics and Evaluation’s (IHME) COVID-19 projections show demand for hospital services in each state. The demand for these services is expected to exceed capacity in most states.
PwC’s COVID-19 Navigator
PwC’s team of specialists collaborated to create a digital assessment to help you understand the potential impact to your business and gauge your readiness to respond. The digital tool contains 3 sections of questions that will help you understand where your company stands as you respond to COVID-19 in the areas of: crisis management and response; workforce; operations and supply chain; finance and liquidity; tax and trade; and strategy and brand.
John Hopkins University Global COVID-19 Dashboard
This resource has the latest medical numbers for COVID-19 cases, deaths, recoveries, and more — and it’s all sorted by country and/or state and province. Importantly, it also updates in real-time, so you always know you are getting the latest numbers.
St. Louis Federal Reserve’s COVID-19 Economic Indicator Dashboard
A dashboard for monitoring the economic conditions in the U.S. economy, with a focus on the impact from the COVID-19 pandemic. St. Louis Fed will continue to add indicators to this dashboard as the situation develops.
COVID-19 Retail Impact Tracker by Placer.ai
Follow in real time how foot traffic has changed to your favorite grocery store, retail store, restaurant, or pharmacy as the number of confirmed COVID-19 cases increases.
COVID-19 Retail Pulse Survey by SalesPro
Like the dashboard above, this dashboard relies on survey feedback from retail giants like Target, Sam’s Club, Office Depot, and more to create visualizations regarding the impact of COVID-19 on their stores with categories such as: store status (open/closed), inventory levels, and customer engagement.
COVID-19 Infection Curve Interactive Graph Presented by Our World in Data
The interactive graph is updated every day to show the progress of countries around the globe and their efforts to flatten the curve of COVID-19 infections.