As July 2020 concludes, the USA faces a continuation of the 1st wave of the Covid-19 pandemic across the Southern and Western states, with hospital systems in those states facing increased or overwhelming caseloads. At the same time, Spain, Germany, Australia, Japan and other parts of Asia report a possible second 2nd wave of the pandemic. This is occurring just as the USA tries to re-start the economy after periods of forced shutdown. Experts have always warned that pandemics follow a predictable pattern of three distinct waves. Will the Northeastern states face a 2nd wave this fall? Followed by the rest of the country? Will there be a 3rd?
If that were not enough of a problem, the civil commotion that has gripped the nation continues to escalate along with the temperature. Summer 2020 is shaping up to be one of the hottest on record for the Northern Hemisphere. Many prognosticators believe that the forced shutdowns of the spring, coupled with the George Floyd tragedy, compounded by the heat and continued economic distress has combined into one big mess for our society.
The Senate is meeting currently, debating yet another trillion or so dollar stimulus package to match up with the multi-trillion-dollar stimulus package passed by the House of Representatives. Since it is an election year, one must assume yet another trillion or two will be added to the $6 trillion already spent in 2020. When will inflation or ‘70’s style stagflation return? Since 2008 every central bank on the planet that has money has worked to prevent another Depression. The 2020 stimuli programs dwarf any ever contemplated in the past. Where will this lead us?
Meanwhile, normal insurance issues continue to occur almost as a backdrop to the unusual circumstances we are experiencing this year. Hanna plowed into South Texas and Douglas barely missed Hawaii. We have three months to go before hurricane season winds up.
Whereas Covid-19 business interruption claims remain in dispute, likely for years to come, property damage from hurricanes and civil commotion are insurable. Liability for municipalities facing resumption of shutdowns or are involved in civil commotion may be exposed to liability. The insurance marketplace does not look like it is prepared top confront increased claims activity at the same time that suppression of economic activity will inevitably result in a drop in demand for insurance.
Finally, did I mention that there is an election in November? So many unknowns!
At some point we will return to normalcy. This time around it really will be a “new normal.” We must prepare now and think through what we think may be the differing alternative “normal” worlds that could result from today’s turmoil. This really is the risk management process: identify your exposures to potential loss, prioritize, compare and implement techniques to address those loss exposures (insurance is but one), revise your plan as circumstances change.
What worked for you before may not work today nor tomorrow. The trick is to work through the difficulties, adapt and survive, literally and figuratively, until this set of difficulties passes. These problems will resolve in time.