While the greater Houston area has experienced, and learned from any number of natural disasters, COVID-19 is proving to be much more challenging to navigate.
Whether your business operations are categorized as “essential” or non-essential, all businesses are being affected in ways that were not predictable.
We are all learning as we go. That includes the insurance regulatory bureaus, state governments and insurance companies. There are many unanswered questions around changes in payroll, estimated sales and other historically auditable components of insurance. The insurance industry is working diligently to develop strategies specific to the effects of the pandemic that are in the best interest of policy holders.
Currently the State of Texas has implemented a moratorium on canceling policies for non-payment of premium and in the short term, insurance, and finance companies are working with policy holders to adjust payment plans and waive late fees when needed.
Now more than ever, good, clear record keeping is critical. Insurance regulators, state government and insurers are reviewing rules and guidelines for auditing. At this time, there are no formal announcements or guarantees on audit exceptions; however, we recommend that you keep very specific records regarding payroll and operational changes made during the pandemic that may potentially have a positive effect on your policy audit results. For example:
- If you are retaining employees but they have taken on different duties, make sure their on-going payroll is allocated to the new role and appropriate classification for the work they are performing.
- If you are continuing payroll for some or all employees but they are not actually performing work, make sure your records capture the period of time you are paying them, without work being performed by placing that payroll into a separate category.
Take action now . . . make sure your record keeping reflects exactly what you are experiencing during the pandemic. When your policy term audit is due, make sure you present these records and ask clarifying questions about possible pandemic related adjustments.
Should you have any questions, please contact a member of your BCH service team.