Insurance Makes ‘Essential Business’ List for States Restricting Commerce Due to Virus

Insurance industry professionals might take some pride in knowing that they are considered essential.

In states where only essential businesses are allowed to keep operations going during the coronavirus epidemic, it appears insurance employees can continue to work.

Of course, they must still practice social distancing, limit human contact and, where possible, switch to remote work.

Most states identify health care, grocery stories, pharmacies, utilities, first responders, military, shipping and financial services as among essential businesses.

The following states have issued some sort of order limiting business operations and/or citizens from congregating or leaving their homes for non-essentials. But most appear to exempt insurance from restrictions and consider it an essential business:

Alaska, California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Kansas (Johnson County), Louisiana, Maryland, Massachusetts, Michigan, New York, Ohio, Oregon, Pennsylvania (7 counties), Washington and Wisconsin.

New Jersey mentions financial services but makes no specific mention of insurance as an essential business.

The situation is changing daily and can be less clear for some businesses other than insurance. There is no mandatory federal order on what is an essential business, although there is guidance from the Department of Homeland Security that states can follow.

Insurance is so important it’s right up there with pot shops in several states including Pennsylvania, California and Hawaii, where the restrictive orders allow marijuana dispensaries to continue operating. Liquor stores make the grade in some states, too.

“I am seeing a number of situations where a business is deemed essential in one state, but non-essential in the state next door. That is nuts. There should be a federal standard,” Gerald Hathaway, an employment attorney with Faegre Drinker Biddle & Reath in New York, told Insurance Journal.

Treasury Secretary Steven Mnuchin issued a memorandum specifying that financial services — including insurance — is a “critical infrastructure sector” and its employees should continue to work amid the coronavirus pandemic. The Treasury memo mirrors the language of COVID-19 guidelines issued by the Department of Homeland Security on essential workforces.

This is how the Treasury and DHS guidelines on critical workforces describe those in critical sectors related to insurance: “Workers who are needed to process and maintain systems for processing financial transactions and services (e.g., payment, clearing, and settlement; wholesale funding; insurance services; and capital markets activities).”

However, DHS leaves states leeway to use their own judgment in deciding what are essential businesses and critical functions in their states.

“[T]his list is advisory in nature. It is not, nor should it be considered to be, a federal directive or standard in and of itself. In addition, these identified sectors and workers are not intended to be the authoritative or exhaustive list of critical infrastructure sectors and functions that should continue during the COVID-19 response. Instead, State and local officials should use their own judgment in using their authorities and issuing implementation directives and guidance,” the DHS memo says.