COVID has made us rethink how we operate as a society, not just personally but professionally. In March, I thought for sure we would be back to business as usual by July at the latest and here we are nearing Q3 and we are far from “business as usual”. I don’t think we will ever go back completely to the way businesses operated prior to COVID. Too many conveniences have been demonstrated to simply turn back. For instance, virtual meetings and remote work have provided many employees and business owners with a new perspective of work life balance and expense control that will remain desirable moving forward.

In the beginning of the pandemic, those of us employed in the insurance industry breathed a sigh of relief as governors around the country began to declare insurance essential business. Some agencies were able to transition to a virtual office environment easily while others continued to bring staff in but with restrictions. The fact that we could keep our doors open, care for our customers, and keep our staff employed was a huge win for our industry.


Over the past few months, we have witnessed the devastating impact of COVID on the small business sector of those forced to close as stay at home orders swept the country.

According to Yelp, 66,000 of the small businesses that utilize the platforms directory and review services have closed due to the COVID pandemic. The sector hit the hardest by this has been the restaurant industry with a permanent closure of 60%. Shopping and retail business have suffered permanent closures of 50%.  Bars and nightclubs represent a closure of 44%. Beauty salon and spa closures are at 36% and fitness facilities represent closures of 39%.

These numbers rose significantly as many of the stay at home orders lifted. The month of June had an average increase in closure rates across sectors of about 25%. Small businesses struggled to open and adhere to the social distancing guidelines while consumers lack of confidence in safety keeps many of them from dining out, returning to gyms, shopping, or visiting the bars.


Our country has more than 50 million people out of work due to permanent business closures or continued restrictions that make it harder to operate at levels prior to COVID.

With so many Americans out of work, many are looking to cut costs.  One area is insurance premiums. According to a study by Bain & Company of 43,000 consumers, 19% of them ask for temporary relief of life insurance payments while another 9% deferred their P&C premiums.

The same study revealed that 19% of those respondents shopped and switched their insurance for lower rates — which is a significant increase from the year prior in which less than 5% did so.

Work from home and stay at home orders have equated to a significant decline in the number of miles Americans drive. We are no longer driving our cars 85% of the time back and forth to work each day. Along these lines, COVID has shifted the mindset of the consumer on how we should be paying for insurance. The Bain & Company study revealed an increased desire for usage-based insurance. Their survey found that 21% of respondents had already purchased usage-based insurance while 56% indicated they would consider it in the future.

We are living in a virtual world more now than ever. Investing in digital and website automation will be necessary moving forward as consumers are embracing a more virtual world. This is not to say that human interaction isn’t necessary. I believe it will always be necessary on some level, but potential clients need to be able to Google search and find your agency. Clients will want the ability to interact with you on different mediums and at times that are convenient for their lifestyles. Change is here and you may be looking for ways to handle that change.

All this turmoil from COVID may have you thinking about the future of your agency in a different way. Some owners may be struggling to change to meet the demand of a workforce who is seeking the work life balance of remote work. The required investment in technology to offer that as an option may not be appealing if you are nearing retirement. Revenue reductions due to lost business, premium refunds, and exposure decreases may also have you concerned about your financial future.


You are not alone. OIA has resources available that can help you no matter which direction you choose. If you need help to modernize your agency, we have experts that can help you with determining technology needs, business planning, streamlining operations and much more.

We can also help you if you are considering retiring a little earlier than planned or merging with another firm that may have the resources necessary to compete moving forward.

If you are looking to sell, we have valuation services that can help you determine the value of your agency to ensure you are getting the right price. It’s not as easy as a multiple of revenue and you could be selling yourself short by doing that back of the napkin calculation.

Agency link, offered by OIA, helps align sellers and buyers to make the process smoother and takes some of the initial work out of deciding if you are a right fit for each other.


OIA is the agent’s agent. All too often we, your agent, aren’t notified of an agency’s sale or merger until after it has occurred – or worse –not until renewal time. The best possible scenario is learning about the sale or merger prior to the actual closing.

When we know beforehand that you’re selling your agency, we can advise you and help you understand your E&O policy and the notification requirements.

Whether it’s called “change of control,” “mergers and consolidations” or simply “sale, transfer or assignment,” there is a provision in the conditions section of your insurance policy. It seeks to clarify what happens to your insurance policy once you have a majority change in ownership.  In some policies, the coverage available under your E&O policy ceases on the date of the sale or merger. Don’t be left uninsured because you didn’t notify us.


Professional liability policies have an automatic extended reporting period that begins on the date coverage terminates and allows for claims reporting for an additional 30 to 60 days depending on the policy form.

Once your automatic extended reporting period begins, the clock starts ticking off the days that are left for you to purchase the optional extended reporting period or “tail coverage.” If you don’t purchase this tail coverage, you could be left uninsured.

Unlike occurrence-based policies, E&O insurance is written on a claims-made basis. This means you must have a policy in force on the day the loss is reported to trigger coverage.

The automatic extended reporting period is typically 30 to 60 days (depending on the policy form) in which you can still file claims for wrongful acts that occurred prior to the cancellation of your policy and after your retro date. Therefore, this extends only the reporting time and not the policy period.

What happens if your E&O policy has a provision that coverage ceases on the day you have a majority change in ownership?

If you sell your agency effective June 1, the policy coverage terminates. You now have 60 days (approximately August 1) to report any wrongful acts that occurred prior to June 1 but after the retro date on your policy.

If you wish to extend the reporting time (and typically you are required in contract with the buyer to purchase tail coverage) you only have until August 1 to purchase the optional extended reporting period. This ranges from 1 to 10 years depending on the carrier.

Once the 60 days are exhausted, you no longer have the option to purchase tail coverage and you will not have any coverage for wrongful acts that are alleged to have occurred prior to the termination date.

Without coverage, you are now personally responsible for defense and any settlement or judgments that occur. In addition, you are in breach of contract with the buyer.

If you’re planning an ownership change of your agency, please call your E&O representative to discuss your policy. Already sold or merged your agency? Contact OIA’s E&O team immediately if you’re unsure of the next steps — we’ll help you navigate through the E&O process!

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