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Staff Photo by Robin Rudd / The sixth floor of the Unum Group's parking garage is empty. Like many Chattanooga businesses the majority of the Unum Group employees are able to work home.

The coronavirus has thrown millions of Americans out of work and upended the usual ways those still on the job buy insurance for everything from their cars to their health care.

But amid the pandemic hit to the economy, insurers have quickly adapted to virtual tests, enrollments and coverage while adapting their own work sites to shift most of their staff to remote work from home this year.

David M. Cordani, president of Cigna Healthcare, which has more than 1,200 employees in Chattanooga, says the coronavirus is reshaping the U.S. economy.

"The current environment that we all live in and work in is more dynamic, more unsettled and more complex than any time in recent history," he told analysts this summer.

While the weaker economy has cut the rolls of some types of insurance, the virus has also emphasized the need for protection against unforeseen risks and threats.

"The virus has shown people the importance of being insured," says Roy Vaughn, senior vice president for BlueCross BlueShield of Tennessee, the state's biggest health insurer. "It's certainly been a challenging time for all of us, but what we offer remains vital."

Unum CEO Rick McKenney says the pandemic "has amplified the need for what we do" and the need for insurance protection against unforeseen events.

"The fragility of many Americans' financial lives has never been more obvious than what we are experiencing today," he says.

While job losses have trimmed some business-paid or employer-sponsored health, disability and life insurance plans, individuals, in some instances, have made up for some of those losses by buying policies on their own.

Thousands of workers handling claims in Chattanooga by such insurance giants as BlueCross, Unum and Cigna — and hundreds of local brokers and HR specialists handling benefits — are preparing for an unprecedented online sign-up process for insurance plans at most businesses during the fall re-enrollment period.

"As we head into annual enrollment season, we expect more businesses and employees will prioritize certain benefits as a result of the pandemic," Unum spokesman Kelly Spencer says. "Disability, life, and hospital insurance are three types of coverage we think will be more popular this year."

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Insurance amid the pandemic

 

Moving out of the office

Most of the more than 10,000 Chattanooga area employees working in the insurance industry are working these days from home, rather than in the office, and most employee meetings about benefits are being done online, rather than in person.

The shift in how and where people work is forcing changes in traditional workplaces and rules, but insurers report productivity has remained strong and even improved in some areas. BlueCross now expects to shift a majority of its Chattanooga staff to permanently work from home. Nearly the entire local staff of Cigna Healthcare is doing their work from home. Unum closed a 400-employee office in Massachusetts in July and, as part of its flexible workplace effort, is seeking to lease out part of its Chattanooga corporate headquarters.

"Remote work is a contemporary solution that strengthens our business resiliency and reduces costs, like building space and office expenses," Spencer says.

Global Workforce Analytics, a consulting firm that studies the future of work, estimates the typical company can realize an extra $11,000 a year in benefits from each teleworker through both reduced office expenses and improved worker productivity.

 

Auto, life coverage cheaper

One silver lining in the pandemic has been some price breaks in insurance, especially for automobile coverage made cheaper as fewer cars are on the road and fewer miles are driven. At State Farm, Tennessee's biggest auto insurer, corporate vice president Dan Batey says auto claims were down in early spring by as much as 40% after stay-at-orders kept most Tennesseans at home.

J.D. Power estimates U.S. automobile insurance customers have gotten about $18 billion in refunds this year in response to the drop in accident claims.

With more than 200,000 Americans dead from coronavirus and the death toll from the pandemic still rising, consumers might expect that life insurance rates would be rising. But life insurance costs also have declined this year.

Ryan Krueger, a securities analyst at Keefe, Bruyette, and Woods, says the cost of settling claims from COVID-19 deaths won't be significant among all causes of death in the U.S., and life insurance rates have continued a multi-year decline in 2020.

Some of the declines are due to regulatory changes that have reduced the amount life insurers must keep in reserve to cover claims — which in turn have reduced their costs to do so. But the biggest factor keeping rate premiums down is longer lives. The current life expectancy for Americans is 78.9 years, according to United Nations data, which is more than two years higher than in 2000.

Money magazine reports that a 40-year-old, non-smoking female in average health can today buy a 10-year term policy with $500,000 of coverage for as little as $27 per month. Five years ago, that same policy cost 50% more — $41 per month.

Major insurance employers staying home

In the Chattanooga area, three of the top 12 employers are insurance companies.

* BlueCross BlueShield of Tennessee, 5,580 full-time employees and 1,433 part-time employees, at its Chattanooga headquarters. More than 90% are working primarily from home.

* Unum Group, 2,800 full-time employees at its Chattanooga headquarters. About 85% of employees still work remotely.

* Cigna HealthCare, 1,830 full-time and 23 part-time employees work at the company’s claims processing facilities in Chattanooga. Nearly all are now working from home.

Source: Chattanooga Area Chamber of Commerce Major Employer List, 2020, and company reports.

 

As a result, during the first half of 2020, application activity for life insurance rose 1.5% from the previous year, according to the MIB Life Index, as the pandemic encouraged many people to consider the financial security of their families and life insurance became a priority for more consumers.

A survey conducted in May and June 2020 by Life Happens, an industry-funded education group, found that 67% of Americans say the pandemic has been a wake-up call for them to examine their finances. And 30% say life insurance has been one of the top topics to consider in their financial planning.

"It's unfortunate it takes an event like this to remind us that we're all mortal and just one unforeseen event away from needing that policy," says Brooks Tingle, president and CEO of John Hancock Insurance.

 

Health care shifts & costs

Health care claims also dropped during the initial months of the pandemic despite the number of people hospitalized due to the virus. When hospitals and physician offices suspended non-essential care, physician visits and hospital stays plunged during the end of March and continued through April and May. Nearly 60% of Americans canceled or delayed a health care appointment due to concerns about exposure to COVID-19 since the crisis began.

Some routine visits and elective surgeries may never be made up, but many of these visits and exams canceled this spring are being rescheduled for this summer or fall.

But the cost of a hospital admission for patients with COVID-19 can be tens of thousands of dollars, and there were over 100,000 hospitalizations just in the early months of the pandemic, according to the Kaiser Family Foundation. The virus has also brought about extra costs for testing and eventually will bring extra costs for an effective pharmaceutical treatment or vaccine. All of the major health insurance companies have waived fees for most coronavirus testing and treatments.

"COVID insured losses are significant and will likely add up to one of the largest insured loss events in history," says David Flandro, managing director, Analytics, Hyperion X. "This being the case, we can now say with increasing confidence what we have said from the beginning: these losses are manageable and are affecting earnings, not solvency."

The virtual reality of remote doctor visits

Telehealth visits jumped 55-fold this spring after BlueCross BlueShield of Tennessee became the first major health insurer in the country to commit to covering in-network telehealth services on an ongoing basis.

* 14,867 claims from 462 providers from March 16 to June 30, 2019

* 812,816 claims from 17,018 providers from March 16 to June 30, 2020

The top telehealth diagnosis codes were for mental health needs.

1. Generalized anxiety disorder

2. Essential hypertension

3. Attention-deficit hyperactivity disorder

4. Major depressive disorder

5. Post-traumatic stress

6. Autistic disorder

7. Anxiety disorder

8. Adjustment disorder with mixed anxiety and depressed mood

9. Major depressive disorder single episode

10. Major depressive disorder, recurrent features

Source: BlueCross BlueShield of Tennessee

 

Surge in telehealth

While the ultimate costs of COVID-19 remain uncertain, the virus almost certainly accelerated the trend toward doctor visits online.

Telehealth visits jumped 55 fold this spring at BlueCross of Tennessee, which was the first major health insurer in the country to commit to covering in-network telehealth services on an ongoing basis.

"When we find something that works and truly makes a difference to people, we have gone ahead and implemented that such as telehealth," says Dr. Andrea Willis, chief medical officer at BlueCross.

Cigna Healthcare has implemented virtual care billing through the end of the year to allow providers to be reimbursed for a standard face-to-face visit for all appropriate virtual care services accessed via video, phone or internet.

"Moving forward, we realize that the pandemic has accelerated the use of these services, and we're evaluating our reimbursement policies to reflect this change," Cigna spokesperson Holly Fussell says.

Rae Bond, executive director of the Chattanooga-Hamilton County Medical Society, says the growth in online physician visits is one of the greatest lasting benefits from the pandemic.

"I think that over the long term, as we face the next health issue, the growth in telehealth is going to make it much easier for us to provide care in rural communities and other underserved areas," Bond says.

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Rae Bond is the executive director of the Chattanooga/Hamilton County Medical Society. Her title was incorrect in an earlier version of this story.

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