March 25, 2020. The government of Canada mandated an immediate 14 day quarantine due to the COVID-19 global pandemic. Since the beginning medical PPE (face masks, gowns, etc.) has become a valuable resource and governments all around the world turned to the private sector to be able to quickly fill orders. However a clear truth became evident quite quickly, there was not enough companies or production lines up and running to solve this issue with the speed at which governments needed.
This drastic need for PPE had created a gap in the market, a gap that many new companies would happily try to fill. In order to start working with the Canadian government one of the main requirements was insurance, liability insurance. Here at KASE Insurance we've been able to help many companies secure the required insurance in order to get these companies off the ground and begin their ability to fill these orders.
Not only were we able to secure the insurance but to get it in record time, in some cases as soon as 24 hours. While dealing with these companies we've spoken on behalf of our clients with the provincial government, federal government, and insurance companies at Lloyd's of London.
The main coverage government and contract approval bodies are looking for is Commercial General Liability also sometimes referred to as Public liability insurance. This coverage provides funds in the event that the insured company is sued for bodily injury, property damage, personal or advertising injury, products and completed operations. Most government authorities, both federal and municipal, here in Canada are looking for a minimum of $5,000,000 in Commercial General Liability.
Details insurance companies are looking for when considering submissions
When considering companies to grant coverage to the insurance the first thing they're looking to review is what products is the proposed insured looking to get coverage for. There is a drastic difference between bio-contamination suits that filter radiation and viral defence face masks. It's important to have a product list together before applying for insurance.
Once the products have been reviewed the next thing insurers look at is the manner in which the products are manufactured. Is it an accredited manufacturer? Where are the products manufactured? Does the insured have control over the manufacturing process or specs of the product? What quality control efforts are being made? Who is performing the quality control? Can products be altered by the end user? Are products affixed with proper warnings and safety instructions? These questions are just the basic ones being asked.
One of the final details insurers review is the amount of PPE being sold, in a lot of cases this is going to be an estimate. Estimates are expected for new companies but thought and proper planning needs to go into creating these estimates. You don't want to be in a situation where you've planned to sell 10,000,000 masks and only end up selling 500,000. You're going to be overpaying for your first year of insurance. Insurance companies need to gauge how much exposure they're opening themselves up to. The more revenue a company has the more exposure it opens itself up to (the more chances for something to go wrong and a lawsuit be brought forward).
What to look for in an Insurance Company and a Broker
Experience & Focus
The main things that you should look for when reviewing the insurance company your broker is presenting to you is their experience and focus. Because Insurance that covers PPE is a specialty category most standard (large Canadian insurance companies such as Intact, Northbridge, Economical, Unica, etc.) won't look to provide coverage. Instead there's a high chance that the broker will be a approaching an MGA (specialty insurer in Canada) and the insurance company that will ultimately provide coverage will be a Certain Underwriter at Lloyds.
Most MGAs and Lloyds companies specialize in certain industries (construction, engineering, healthcare, cannabis, etc.) but sometimes you have ones that are more generic and unfocused. This should be a huge red flag when it comes to covering PPE. Because of the nature of PPE, preventing harm to the user, the underwriter needs to know in detail the potential risks if the product fails.
You should always be looking to be insured by an insurance company that has lots of experience when it comes to insuring the medical field.
When dealing with a broker you should look out for one that, similar to the insurance company, has experience insuring similar companies. This way they'll be able to provide you rough premium expectation, details underwriters are looking for, expected timelines, and most importantly which insurers to approach to maximize your market approach.
Often when a company is looking to get insurance for medical PPE it's to fulfill a contract requirement, meaning its one of the only things standing between them and closed business. The last thing companies are looking for is any unnecessary delays because the broker is not responding or is having trouble finding who to place the insurance with.
At the end of the day listen to your gut. Because insurance is such a crucial part of anyone's business you need to feel comfortable with the person and team you're dealing with. As a broker we're privy to sensitive information such as revenue, performance, asset ownership, business practices, and a whole lot more. If you're not comfortable or don't trust your broker with this information chances are you're not with the best broker for you. Not every broker is equipped to serve accounts of this nature to the highest standard, and that's okay, I'm sure they're great at other types of insurance.
PPE liability coverage is not a common one, at least not yet. It requires knowledge of the industry; product familiarity, production methods, knowledge of which insurance companies are looking to insure these products, and the specifics of what they're looking for in their clients. It's just not a common risk yet and specialization is an important asset.
Commercial Insurance Broker