“Shelter in place” orders and the closure of businesses deemed “non-essential” by local and state governments following the outbreak of COVID-19 have caused unemployment to skyrocket. This is evidenced by the number of individuals filing for unemployment the last two weeks, and, it is expected that a large number of the individuals laid off at the outset of the virus would fall into the non-standard insured category. The BMS Wheels Specialty Practice Group has reached out to a variety of program carriers, managing general agents (MGAs), and reinsurers with a focus on non-standard automobile insurance to discuss the potential implications of COVID-19.
Everyone BMS spoke to stated that it is too early to tell what the overall impact on the MGA private passenger automobile market will ultimately be, and all the respondents agree that it will come down to how long the “shelter in place” order lasts. However, despite not knowing what to expect regarding severity of this impact, discussions centered around the negative impacts stemming from state mandates, decreases in policy count and premium, the effect on profits, and the potential for fraud. Participants agreed that, depending on how long the COVID-19 “shelter in place” orders remain, these negative implications could be offset by the decrease in the frequency and severity of automobile accidents.