On Dec. 15, the Senate Commerce Subcommittee on Manufacturing, Trade and Consumer Protection, held a hearing entitled, “Examining the Impact of COVID-19 on the Live Entertainment Industry.” The hearing discussed the pandemic’s impact on the live event entertainment industry and the challenges faced by artists and venues, as well as supporting industries such as lighting and transportation. Legislative proposals on how best to provide relief to the industry and these specific sectors were mentioned by senators and the four witnesses representing the different sectors.

The Business Continuity Coalition (BCC) submitted a statement to be inserted in the hearing record recommending that a public/private insurance program be developed to address the insurance needs of all impacted lines of insurance, including event cancellation, which is key to the live entertainment industry. The BCC statement highlights the magnitude of the shortcomings in our country’s preparedness for, and resilience to, catastrophic events of the scale and nature of the COVID-19 pandemic crisis, and suggests this coverage gap in insurance for losses from business interruption be addressed through a federal initiative in order to promote the economy’s recovery. This is especially true for the entertainment industry, including live performance and broadcast, where private insurance alone cannot and will not remedy the current gaps.

In its prepared statement to the Senate Commerce Subcommittee, the BCC advocates for a federally-backstopped availability mechanism similar to the highly successful one which Congress put in place to provide compensation after terrorism attacks nearly two decades ago. Such a mechanism, in the event of a government-declared pandemic health emergency, would enable employers to keep payrolls and supply chains intact, help limit job losses and furloughs, reduce stress on the financial system, and speed economic recovery when government-imposed limitations on business operations are lifted.

The BCC represents a broad range of business insurance policyholders – large and small – from across the American economy, employing more than 60 million workers. The coalition’s members will continue to advocate for a public/private insurance program to limit future economic damage from pandemics that cause business interruptions.

Download a copy of the full BCC statement below.

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On Dec. 3, the BCC’s counsel, Charles Landgraf of Arnold & Porter, participated in the Treasury Department’s Federal Advisory Committee on Insurance (FACI) meeting. Landgraf discussed the need to support multiple lines of business to ensure a robust economic recovery in light of a government-mandated shutdown of business operations.

Landgraf said there should be a backstop similar to the Terrorism Risk Insurance Act (TRIA) for property and casualty insurers and he highlighted that TRIA was successful because it helped the economy recover by supporting lenders and employers.

Representing the BCC, Landgraf also shared that it is essential to establish a TRIA-like availability backstop for all the relevant P&C lines of business impacted by the current pandemic. Additionally, he explained that the BCC’s plan forthrightly addresses affordability during an initial economic recovery period, which would reset if there is a major pandemic event within the first five years.

The BCC recognizes that a plan must meet the needs of a broad range of groups: the businesses and employers directly impacted, insurers, lenders and other creditors, policymakers, and taxpayers, and it will continue to reach out to Congress and other federal stakeholders to achieve the best results.

Updated: Dec 14, 2020

The magnitude of the COVID-19 pandemic’s financial and social impacts has exposed significant shortcomings and vulnerabilities in our country’s preparedness for and resilience to systemic catastrophic events of this scale and nature. This includes coverage gaps in insurance protection for losses from business interruption occurring arguably in the absence of “physical damage” to the business location. Equally important, coverage gaps for the pandemic risk have also been revealed or developed as a result of this year’s crisis in other lines of insurance, including event cancellation, film & TV production package, general liability, and employment practices liability insurance. The crisis has also put stress on workers compensation insurance.

Although overshadowed for the moment by other effects of the pandemic, if not remedied, these insurance gaps will hinder any recovery, especially impacting business lending, new leasing activity, retail and hospitality, housing construction and development, as well as media production. Private insurance alone cannot and will not remedy the gaps -- at least not in the short-term -- but private insurers need to be part of the solution. What is urgently needed is a federally-backstopped availability mechanism similar to the highly successful one which Congress put in place for terrorism following 9/11-- in short, a TRIA-style program for pandemic risk.

Impacted lines of insurance need to be supported with both a “make-available” mandate and a robust federal backstop for the private insurers making the insurance available. During at least a five-year economic recovery period (subject to reset if the pandemic recurs), the federal backstop should be provided without charge (as is the case with TRIA) to ensure affordability and maximum take-up, and the economic resiliency that will foster. To effectively speed economic recovery and help limit job losses, the federal backstop should support not only business interruption coverage, but also other pandemic- impacted lines of insurance, such as event cancellation, workers compensation, production or cast insurance (for film and television productions), trade credit, and general and employment practices liability insurance.

As recognized by all other major proposals currently being vetted, the business interruption line of insurance needs a special rule given the particular gap exposed by the COVID-19 crisis. That is, the insurance product needs to be both for non-physical-damage business interruption (NDBI) and provided on a parametric basis, which may be the only way to ensure widespread, rapid delivery of assistance to America’s businesses in future pandemic crises. Liquidity to meet these rapid pay-outs should be guaranteed. Insurers can be given an option to satisfy their availability duty by supporting a joint underwriting facility which would itself have a federal backstop. Maximum utilization of global reinsurance capacity and capital markets should also be encouraged. Long-term program continuity is paramount given the time horizon needed for financing this risk.

Download a copy of the full BCC statement below.

HFSCHearing - Insuring Against a Pandemi
Download • 133KB

Download a copy of the full testimony.


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