the covid-19 economy and impact to business...2020/08/07 · us continued ui claims, weeks on ui,...
TRANSCRIPT
The COVID-19 Economy and
Impact to Business
Hosted by Brown & Brown Insurance
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Discussion Topics
Clinical and Medical Response Update
1The Macroeconomy and COVID-19
2Litigation Trends, Tort Shields, and Chamber Business Support Initiatives
3
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Resource Center• Find more information on other insurance implications
at bbinsurance.com/covid19
• Resource Links:
• WHO - www.who.int/health-topics/coronavirus
• CDC - www.cdc.gov/coronavirus/2019-ncov/index.html
• National Business Group on Health -https://www.businessgrouphealth.org/topics/blog/the-evolving-situation-of-coronavirus-what-we-know-and-what-we-dont
• OSHA – www.osha.gov
Q&A• Please submit any questions in the Live Chat feature of this webinar
or direct them directly to your service team.
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The information in this program is based upon the very dynamic and evolving outbreak of respiratory disease caused by a novel (new) coronavirus that was first detected in China and which has now been detected in more than 100 locations internationally, including in the United States. The virus has been named “SARS-CoV-2” and the disease it causes has been named “coronavirus disease 2019” (abbreviated “COVID-19”). The information presented is current as of the date of this program, but it may change in the coming hours and days ahead. Participants are encouraged to refer to information from the U.S. Centers for Disease Control and Prevention (“CDC” at www.cdc.gov).
The information provided in this live stream does not, and is not intended to, constitute legal, tax, or medical advice; instead, all information, content and materials available in this program are for general informational purposes only. Information on this live stream may not constitute the most up-to-date legal, tax, medical or other information. This program contains links and references to other third-party websites. Such links are only for the convenience of the participant, users or browser; Brown & Brown, Inc. and its teammates are not responsible for the contents of the third-party sites.
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Please be advised that any and all information, comments, analysis, and/or recommendations set forth relative to the possible impact of COVID-19 on potential insurance coverage or other policy implications are intended solely for informational purposes and should not be relied upon as legal or medical advice. As an insurance broker, we have no authority to make coverage decisions as that ability rests solely with the issuing carrier. Therefore, all claims should be submitted to the carrier for evaluation. The positions expressed herein are opinions only and are not to be construed as any form of guarantee or warranty. Finally, given the extremely dynamic and rapidly evolving COVID-19 situation, the commentary herein does not take into account any applicable pending or future legislation introduced with the intent to override, alter or amend current policy language.
Disclaimer
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Today’s Presenters
Bob Lloyd Executive Vice President and General Counsel
Louise J. Short, MD, MScNational Clinical Leader
Dr. Robert Eyler, PhD
President
Economic Forensics and Analytics
Tom Quaadman
Executive Vice President
U.S. Chamber Center for Capital Markets Competitiveness
Steve Lehotsky
Executive Vice President and Chief Litigation Counsel
U.S. Chamber Litigation Center
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Clinical and Medical Response Update
With Louise J. Short, MD, MSc
Brown & Brown, Inc. Strategic Benefit Advisors
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Q&Awith Dr. Louise Short
Can you provide an update on new methods of testing, including home tests and saliva tests?
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Test Considerations Accuracy Cost Per Test
Swab Testing • Offered at over 3,200 sites across the US • Backlogs at labs continue to delay return of results by up to 5 days >95% $50-$200
Saliva Test
• Solve for the shortage of swabs and other testing materials and requires less PPE to collect samples
• e.g. a person can collect their own sample rather than requiring a medical professional
• Yale, University of Illinois, Rutgers University, Becton Dickinson, Vault and Columbia University manufacture saliva tests
>90% $5-$150
Point of Care (POC)/ Antigen Testing
• Pro: Good for urgent care and medical facilities to produce rapid results for a small number of people
• Con: POC testing cannot analyze a large volume of tests at once85% $5-$10
Serological/ Antibody Testing
• Quantity of tests unknown, many vendors in the market without FDA approval could produce many false positives or false negatives
• Meaning of results unknown, immunity and length of immunity are TBD74%-96% $70-$130
Thermo Screening & Symptom Survey
• Can be used at point of entry coupled with a survey of symptoms to gather data on those entering a building. Requires training for personnel administering the screening and survey
Case by case $60/hour
Q&ATypes of Tests & Considerations
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Q&Awith Dr. Louise Short
Can you share the latest data showing that minorities are at higher risk of getting COVID-19 and have a higher mortality rate? Why is this occurring?
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Q&AData Trends Among Minorities
Source: https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-discovery/hospitalization-death-by-race-ethnicity.html
1 Data source: COVID-19 case-level data reported by state and territorial jurisdictions. Case-level data include about 80% of total reported cases. Numbers are unadjusted rate ratios.2 Data source: COVID-NET (https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/index.html, accessed 08/06/20). Numbers are ratios of age-adjusted rates.3 Data source: NCHS Provisional Death Counts (https://www.cdc.gov/nchs/nvss/vsrr/COVID19/index.htm, accessed 08/06/20). Numbers are unadjusted rate ratios.
Rate ratios compared to White, Non-Hispanic Persons
American Indian or Alaska Native, Non-Hispanic persons
Asian, Non-Hispanic persons
Black or African American, Non-Hispanic persons
Hispanic or Latino persons
Cases1 2.8xhigher
1.1xhigher
2.6xhigher
2.8xhigher
Hospitalization2 5.3xhigher
1.3xhigher
4.7xhigher
4.6xhigher
Death3 1.4xhigher
NoIncrease
2.1xhigher
1.1xhigher
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Q&Awith Dr. Louise Short
What are the latest findings on immunity and whether people can get COVID-19 more than once?
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Q&AImmunity & Reinfection
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The Macroeconomy and COVID-19
With Dr. Robert Eyler, PhD
President, Economic Forensics and Analytics
Professor, Economics at Sonoma State University
17
Agenda• Jobs and Recovery:
• So far, following most forecasts on GDP, with jobs doing better than expected
• US Unemployment in July: 10.2%, 11.37 million jobs lost from July 2019
• Continued claims as a focus of jobs recovery and policy• Policy and Broader issues:
• Jobs momentum and business survival: watching capacity closely• Have the forecasts changed and why?
• Housing and Commercial RE: now competition as workspace?• What to watch: being realistic about recovery and consumers
18
HowRecoveryWorks
Business Stable
Hiring workers
back
Stable Labor and Housing
Markets Regionally
Need to work in conjunction and depend on rising certainty
Caveats: labor force shifts and potential use of capital
19
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Jan-
1990
Jul-1
990
Jan-
1991
Jul-1
991
Jan-
1992
Jul-1
992
Jan-
1993
Jul-1
993
Jan-
1994
Jul-1
994
Jan-
1995
Jul-1
995
Jan-
1996
Jul-1
996
Jan-
1997
Jul-1
997
Jan-
1998
Jul-1
998
Jan-
1999
Jul-1
999
Jan-
2000
Jul-2
000
Jan-
2001
Jul-2
001
Jan-
2002
Jul-2
002
Jan-
2003
Jul-2
003
Jan-
2004
Jul-2
004
Jan-
2005
Jul-2
005
Jan-
2006
Jul-2
006
Jan-
2007
Jul-2
007
Jan-
2008
Jul-2
008
Jan-
2009
Jul-2
009
Jan-
2010
Jul-2
010
Jan-
2011
Jul-2
011
Jan-
2012
Jul-2
012
Jan-
2013
Jul-2
013
Jan-
2014
Jul-2
014
Jan-
2015
Jul-2
015
Jan-
2016
Jul-2
016
Jan-
2017
Jul-2
017
Jan-
2018
Jul-2
018
Jan-
2019
Jul-2
019
Jan-
2020
Jul-2
020
URate(%ofLF),SeasonallyAdjusted,Jan1990– July2020,RecessionsShadedAreas
Sources: Bureau of Labor Statistics and EFA
20
USContinuedUIClaims,WeeksonUI,Jan2020– Aug2020
Sources: Bureau of Labor Statistics and EFA
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,00001
/04/
2020
01/1
1/20
20
01/1
8/20
20
01/2
5/20
20
02/0
1/20
20
02/0
8/20
20
02/1
5/20
20
02/2
2/20
20
02/2
9/20
20
03/0
7/20
20
03/1
4/20
20
03/2
1/20
20
03/2
8/20
20
04/0
4/20
20
04/1
1/20
20
04/1
8/20
20
04/2
5/20
20
05/0
2/20
20
05/0
9/20
20
05/1
6/20
20
05/2
3/20
20
05/3
0/20
20
06/0
6/20
20
06/1
3/20
20
06/2
0/20
20
06/2
7/20
20
07/0
4/20
20
07/1
1/20
20
07/1
8/20
20
07/2
5/20
20
08/0
1/20
20
21
-35.0-32.5-30.0-27.5-25.0-22.5-20.0-17.5-15.0-12.5-10.0
-7.5-5.0-2.50.02.55.07.5
10.0
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
20082009
20102011
20122013
20142015
20162017
20182019
2020
Source: Bureau of Economic Analysis
GDPGrowth,1990– Q220201stEst.,SAAR,%Change(ShadedAreas=Recession)
22
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
10.0
20.020
00-Q
120
00-Q
320
01-Q
120
01-Q
320
02-Q
120
02-Q
320
03-Q
120
03-Q
320
04-Q
120
04-Q
320
05-Q
120
05-Q
320
06-Q
120
06-Q
320
07-Q
120
07-Q
320
08-Q
120
08-Q
320
09-Q
120
09-Q
320
10-Q
120
10-Q
320
11-Q
120
11-Q
320
12-Q
120
12-Q
320
13-Q
120
13-Q
320
14-Q
120
14-Q
320
15-Q
120
15-Q
320
16-Q
120
16-Q
320
17-Q
120
17-Q
320
18-Q
120
18-Q
320
19-Q
120
19-Q
320
20-Q
1
% C
hang
e SA
AR
C I G EX IM GDP
GDPContributionbyMajorVariable,2000-2020Quarterly,US,%ChangeSAAR
Sources: Bureau of Economic Analysis and EFA
23
PhiladelphiaFedSurvey,August2020,GDPGrowthandUnemploymentto2023
Source: Philadelphia Federal Reserve Branch
Forecast was 0.7% off in Q2 from actual at median of these 40 forecasters.
Unemployment rate path more pessimistic than reality for now, which is good.
Think 2022 or 2023 before real feeling of recovery here.
24
ConsumerSentiment,UofMichigan,IndexQ11996=100,Jan2000– June2020
0.0
20.0
40.0
60.0
80.0
100.0
120.0
Jan-00 Dec-02 Nov-05 Oct-08 Sep-11 Aug-14 Jul-17 Jun-20
Inde
x 19
66:Q
1=10
0
Source: University of Michigan/FRED
25
JobsLost(%ChangefromPreviousYear),USinApril2020toJuly2020,ByIndustrySector
Source: Bureau of Labor Statistics and EFA
-7.5%-1.4%
-4.9% -4.1% -4.5% -5.0% -6.7% -7.5%-10.4%
-6.1% -8.1%-5.5%
-15.6%-10.0%
-19.7%
-37.8%
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
Total Nonfar
m
Financia
l Acti
vities
Wholesa
le Trade
Constructi
on
Government
Nondurable Goods
Professi
onal and Busin
ess Servi
ces
Transporta
tion and W
arehousing
Informati
on
Durable Goods
Educatio
nal Service
s
Retail Trade
Mining and Logg
ing
Other S
ervice
s
Food Servi
ces a
nd Drinking Place
s
Accommodati
on
Apr-20 May-20 Jun-20 Jul-20
26
PermanentJobLosses,ThousandsofWorkers,January1994– July2020,Shading=Recession
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Jan-
94Ju
l-94
Jan-
95Ju
l-95
Jan-
96Ju
l-96
Jan-
97Ju
l-97
Jan-
98Ju
l-98
Jan-
99Ju
l-99
Jan-
00Ju
l-00
Jan-
01Ju
l-01
Jan-
02Ju
l-02
Jan-
03Ju
l-03
Jan-
04Ju
l-04
Jan-
05Ju
l-05
Jan-
06Ju
l-06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
Jan-
14Ju
l-14
Jan-
15Ju
l-15
Jan-
16Ju
l-16
Jan-
17Ju
l-17
Jan-
18Ju
l-18
Jan-
19Ju
l-19
Jan-
20Ju
l-20
Thou
sand
s of P
erso
ns
Source: U.S. Bureau of Labor Statistics/FRED
Unemployment Level - Permanent Job Losers Permanent Job Losses = Workers where current employer informed worker they are not to be hired back in future by that employer.
May be a pre-cursor to structural change
27
State-LevelUnemploymentRates,July2020State highlights:
UT, NE, ID under 5%
NV down to 14% from 28.2% three months ago
CA at 13.3%, slower movements down
NY 15.9%
TX 8.0%
FL, IL 11.3%
Source: U.S. Bureau of Labor Statistics
28
MedianListingPrice,Current$,SelectedStatesandMSAs,July2016– July2020
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Jul-2
016
Sep-
2016
Nov
-201
6
Jan-
2017
Mar
-201
7
May
-201
7
Jul-2
017
Sep-
2017
Nov
-201
7
Jan-
2018
Mar
-201
8
May
-201
8
Jul-2
018
Sep-
2018
Nov
-201
8
Jan-
2019
Mar
-201
9
May
-201
9
Jul-2
019
Sep-
2019
Nov
-201
9
Jan-
2020
Mar
-202
0
May
-202
0
California Nevada Chicago New York MSA Seattle Atlanta Denver Houston
Source: Federal Reserve (fred.stlouisfed.org)
29
735
3,3043,385
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan-2000
Feb-2001
Mar-2002
Apr-2003
May-2004
Jun-2005
Jul-2006
Aug-2007
Sep-2008
Oct-2009
Nov-2010
Dec-2011
Jan-2013
Feb-2014
Mar-2015
Apr-2016
May-2017
Jun-2018
Jul-2019
Aug-2020
S&P500,Jan2000toAugust20,ShadedArea=Recession
Source: Federal Reserve (fred.stlouisfed.org)
30
10Year- 3month TreasuriesSpreadandEffectiveFFR,Jan2019toAugust2020,%,Daily
Source: Federal Reserve (fred.stlouisfed.org)
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.001
/01/
2019
01/2
2/20
19
02/1
2/20
19
03/0
5/20
19
03/2
6/20
19
04/1
6/20
19
05/0
7/20
19
05/2
8/20
19
06/1
8/20
19
07/0
9/20
19
07/3
0/20
19
08/2
0/20
19
09/1
0/20
19
10/0
1/20
19
10/2
2/20
19
11/1
2/20
19
12/0
3/20
19
12/2
4/20
19
01/1
4/20
20
02/0
4/20
20
02/2
5/20
20
03/1
7/20
20
04/0
7/20
20
04/2
8/20
20
05/1
9/20
20
06/0
9/20
20
06/3
0/20
20
07/2
1/20
20
08/1
1/20
20
Perc
ent
10 year - 3 month Effective FFR
31
60.0%
70.0%
80.0%
90.0%
100.0%
110.0%
120.0%
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Nat
iona
l Deb
t to
GDP
(%)
Jan 2020 CBO With Coronavirus Structural Change
DebtandPoliticalConsiderations:CBOestimates inMay2020to2030afterCARESAct,%ofNationalDebttoGDP
Sources: Congressional Budget Office (CBO) and EFA
?
32
DollartoEuroExchangeRates,$/€,August2010toAugust2020,WeeklyNominalValues,notseasonallyadj.(increasemeans$“weaker”against€)
1.18
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
1.50
Aug-2010
Feb-2011
Aug-2011
Feb-2012
Aug-2012
Feb-2013
Aug-2013
Feb-2014
Aug-2014
Feb-2015
Aug-2015
Feb-2016
Aug-2016
Feb-2017
Aug-2017
Feb-2018
Aug-2018
Feb-2019
Aug-2019
Feb-2020
Aug-2020
Sources: Federal Reserve (fred.stlouisfed.org)
33
• GDP Growth: need Q3 and Q4 to show the economy is rising from ashes
• 10-Year Treasury Rates: Do not expect much lift here, especially if financial markets otherwise wobble based on changing news or timelines
• Consumer Spending: confidence moving with virus counts• Business Confidence: better but volatile with virus counts• Bottom line: need vaccine and winter to be tricky without it
• Risks toward 2021• Hotel• Office with high costs of adjusting to new rules• Retail, specifically in downtowns and malls• Multi-family due to lack of migration to suburban or urban CA from other places
for now
CommREDriversandRisks
34
JusttheBeginning?Millionsofft2 ofOfficeAvailable
Source: CBRE Research
35
TheChallengesforHigherEducation
Source: Google Images, ESPN
36
DepthandDuration
37
WhattoWatchtoward2021• Labor market changes:
• Continued UI claims data: need to continue to trend down• Business losses: is structural change coming?
• Fall and winter: caseloads expected to rise, economy affected?• Presidential Election a wild arena• No forecasts adjustments yet to major redux in fall and winter
• Policy: depth and duration• How much more can be done? Prudence versus politics
and debt• Fiscal package to come in December likely to generate a
lot of debate and concern either way (short- vs long-term)
© 2020 Brown & Brown, Inc. All rights reserved.bbinsurance.com/covid19 | August 21, 2020 39
Litigation Trends, Tort Shields, and
Chamber Business Support Initiatives
Steve Lehotsky
Executive Vice President and Chief Litigation Counsel
U.S. Chamber Litigation Center
40
4. Cases & Issues to Watch
2. Federal Legislation
3. State Legislation
COVID-19 Legal Update
1. Litigation Environment
41
Tom Quaadman
Executive Vice President, CCMC
42
a
Small, Medium and Large Business Financing Under the CARES Act
MAIN STREET EXPANDED LOAN PROGRAM AND MAIN STREET NEW LOAN PROGRAM—Both the Main Street Expanded Loan Facility (“Expanded Facility”) and the Main Street New Loan Facility (“New Loan Facility”) are intended to facilitate lending to small and medium-sized businesses by Eligible Lenders.
TERM ASSET-BACKED SECURITIES LOAN FACILITY—The Term Asset-Backed Securities Loan Facility (TALF) is intended to help meet the credit needs of consumers and businesses by facilitating the issuance of asset-backed securities (“ABS”).
SECONDARY MARKET CORPORATE CREDIT FACILITY—Under the Secondary Market Corporate Credit Facility (SMCCF), $25 billion from Treasury will be assigned to a Special Purpose Vehicle that will purchase in the secondary market eligible individual corporate bonds and eligible corporate bond ETFs.
43
Small, Medium and Large Business Financing Under the CARES Act
MUNICIPAL LIQUIDITY FACILITY—The Municipal Liquidity Facility (“Facility”), which has been authorized under Section 13(3) of the Federal Reserve Act, will support lending to U.S. states and the District of Columbia, U.S. cities with a population exceeding one million residents, and U.S. counties with a population exceeding two million residents.
PAYCHECK PROTECTION PROGRAM LENDING FACILITY—The Paycheck Protection Payment Lending Facility (“the Facility”) allows lending by eligible borrowers to small businesses under the Paycheck Protection Program (PPP) established by the CARES Act on a non-recourse basis, taking PPP loans as collateral.
PRIMARY MARKET CORPORATE CREDIT FACILITY—Under the Primary Market Corporate Credit Facility, $50 billion from Treasury will be assigned toward a Special Purpose Vehicle to purchase direct bond issuance from eligible issuers with a maturity of 4 years or less and portions of syndicated loans at issuance (no more than 25% of any loan syndication).
cont.
44
5. Any program should avoid mandating that insurance companies write, or service policies associated with any federal program to cover pandemics
4. Any federal program to provide for pandemic relief should be established through a federal trust fund or through government-sponsored insurance
2. No abrogation of contracts
3. Any legislation that would establish a prospective pandemic program should go through a full, transparent, and deliberative process
Pandemic Insurance Principles
1. Fully fund business relief efforts
45
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