May 19, 2020

COVID-19 State of Insurance Updates

by Scott Thompson

With the slow re-entry to ‘normal’, there are early signs of change within insurance companies and agencies as a direct result of COVID-19. Employers are making requests might surprise you. Here are four big themes we’ve heard from insurance professionals that raise a few eyebrows.

Return to Work

This day is an inevitability. It may even be a welcome change of pace. Not everyone enjoys or is cut out for 100% work-at-home. That said, the way some employers outline Return to Work policies have given employees pause. In particular, managers who come across as ‘old school’ and rush to 100% capacity has made people we’ve visited with uncomfortable.

What You Need To Do: First, if you take issue with a return to work policy, determine where the decision is coming from. Is this a corporate policy or by division? You may be able to work out an arrangement directly with your supervisor that’s different from the rest of the workforce. Remember, Human Resources is another route. They exist to be your advocate and are a place to formalize complaints.

Forced Paid Time Off Usage

One organization has mandated that all their sales reps to use PTO by the middle of summer. Citing that everyone during the pandemic has been ‘working from home’, I guess you could interpret this as the company’s recognition that employees need a break. Maybe, but what if there is something more ominous behind it? For example, the company foresees layoffs and doesn’t want to pay out for banked vacation days.

What You Need To Do: Play by the rules and take your time off but ask critical questions along the way.  Is this because we won’t be allowed to take time off during Q4 (an especially hectic renewal season)? Is this because you’re changing the PTO policy especially any breakdown in vacation, sick or personal time? What happens if I have an emergency and need to take off time later in the year?

Changing Your Non-Compete

A lot of insurance agencies are going to feel the affects of COVID-19 as renewal premiums shift and shape with the economic hit. For producers with books in energy, hospitality or retail, there’s a significant concern about reduced premiums. The agency will need to make adjustments if renewals take a hit, clients go out of business or top line growth isn’t going to hit 2020 projections.

What You Need To Do: For the last several years insurance brokers have been laying around with minimum commission thresholds (nothing less than $5k or $10k in revenue). This could be the first request you field as a change to your contract. The second very well could be reduced commission percentages on vulnerable accounts. The most dramatic may be a change from W-2 to 1099 with higher commissions to you but an expectation that you pay your own expenses. 

Be smart! Changes to your non-compete during times like these are often meant to disadvantage a producer. Be sure to consult a lawyer and take this as an opportunity to evaluate your options.  

Take A Pay Cut

One account manager with a large insurance broker said an email went out last week boldly proclaiming that bonuses, raises and other variable comp were off the table for 2020. Managers have told us they’ve been asked to take 5-10% salary decreases and that might not be the first go around. Most people are understanding about these extreme circumstances, but the way in which sweeping policies are communicated rub people the wrong way.

What You Need To Do: Take the pay cut and know that money isn’t the reason most people start a job search… but it’s absolutely the reason why they change jobs. This type of request may not have been made to you yet, but something similar and more subtle could be on the way. Watch out for delayed reviews or issues paying commission on time. Hiring freezes and vacant positions not being replaced signal cash flow concerns that will eventually pass from the company down to you.  

Remember, not all companies are cutting pay! This might be a sign that you should transition to a different firm. Good and bad companies hold during a financial crisis but great organizations look for ways to expand and take advantage of new opportunities.  

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