Updated: Nov 3

Multi-Industry Group Representing More Than 70 Million U.S. Workers Advocates for Program to Keep Jobs and Businesses Protected in Future Pandemics


WASHINGTON, D.C., Nov. 2, 2021 — The Business Continuity Coalition (BCC) commends the leadership of Representative Carolyn B. Maloney (D-NY) for introducing today H.R. 5823, the Pandemic Risk Insurance Act of 2021 (“PRIA”) legislation that will help the country prepare and respond to any future government-imposed shutdowns of the economy caused by pandemics. The BCC urges bipartisan support for this critical issue.


The Business Continuity Coalition (BCC) – consisting of policyholders representing more than 70 million workers across the U.S. – includes more than 50 industry organizations and companies from the association, broadcasting, communications, construction, entertainment, events, gaming, healthcare, hospitality, housing, manufacturing, restaurant, retail and risk management industries, as well as the apartment, healthcare, industrial, office and retail real estate sectors.


The insurance market disruption for every industry that has resulted from the current pandemic requires a public-private partnership to ensure that our economy is properly protected against pandemic risk going forward. PRIA would create a federal backstop that ensures the availability of pandemic risk coverage in all critical commercial lines of insurance.


PRIA Legislation Summary


The Maloney legislation is modeled on a similar public-private backstop that has had widespread, bipartisan support since its enactment - the Terrorism Risk Insurance Act (“TRIA”) - adopted following the 9/11 terrorist attacks.


  • Like TRIA, the bill would require insurers to offer coverage in return for a government indemnification of 95% of insured losses arising from any future pandemic that results in a public health emergency.

  • Unlike TRIA, there is no “insurer deductible” nor would there be any post-event recoupment, although the program would begin to pay for itself after an initial “economic recovery period.”


The bill is similar to current proposals by the insurance industry in that it establishes a parametric program for non-damage business interruption (“NDBI”) losses in recognition that rapid claims payment and minimal transaction costs are critical when the losses are as high as they may be in a pandemic. The bill also provides a pooling alternative for insurers that do not wish to directly underwrite primary NDBI coverage.


PRIA also addresses the unavailability of coverage in other crucial lines of insurance such as event cancellation, film and TV production insurance, and liability coverage for essential services. Ultimately, the bill would ensure availability of pandemic coverage while fostering the development of private reinsurance and capital market alternatives to reduce taxpayer exposure going forward.


Why the Legislation is Important


The COVID-19 pandemic has demonstrated just how unprepared our economy is for widespread closures, social distancing requirements, and other public health safety considerations that are necessary to combat a global pandemic.


A RIMS survey found that pandemic risk is now excluded or restricted on most lines of commercial property-casualty insurance, and where coverage is available, it is often cost-prohibitive without government support.


A sampling of quotes from BCC members in support of the PRIA legislation is available below. A full list of statements is accessible in the PDF below.


“ASAE strongly endorses the Pandemic Risk Insurance Act of 2021 and its robust coverage for pandemic losses – particularly for event cancellations. As a proud BCC member, ASAE thanks Congresswoman Maloney for her steadfast support of our workers, associations, businesses and communities,” said Michelle Mason, president and CEO, American Society of Association Executives.


“In the insurance marketplace, much of the focus has been on business interruption losses. That’s crucial but far from the only line of coverage impacted by the pandemic. Challenges in securing film and TV production coverages, event cancellation coverage, and other contingency coverages – in our industry and others – continue to plague the marketplace, in addition to serious challenges in finding coverage for communicable disease-related losses in many commercial lines such as general liability,” said Jean M. Prewitt, president and CEO, Independent Film & Television Alliance (IFTA).


“NAB thanks Rep. Maloney and her cosponsors for introducing the Pandemic Risk Insurance Act of 2021. Broadcasters have suffered a heavy financial toll from production delays and event cancellations due to the COVID-19 pandemic, while facing escalating production costs as they work to keep casts, crews and sets safe. Broadcasters strongly urge Congress to create an insurance framework that supports the continued investment in premier broadcast programming and events,” said Shawn Donilon, executive vice president, government relations, National Association of Broadcasters.


“Manufacturers historically have the largest economic impact of any major sector and have worked tirelessly to lead the post-pandemic economic recovery. The COVID-19 pandemic showed there is more to be done to ensure manufacturing jobs and operations are not disrupted. The NAM appreciates Representative Maloney’s leadership in ensuring manufacturers have the resources necessary to maintain operations during any future pandemic related interruptions,” said Alex Monié, director – regulatory, tax and domestic economic policy, National Association of Manufacturers.


“Nareit appreciates the leadership of Representative Maloney in introducing pandemic risk legislation. We maintain it is better to plan and prepare now for the future economic risks associated with pandemic-related and other potential government shutdowns of the economy,” said Steven A. Wechsler, president and CEO, Nareit.


“We appreciate Congresswoman Maloney’s leadership introducing this bill. The restaurant industry faced business interruption injuries they couldn’t even begin to imagine during the pandemic and have been devastated as their insurance claims were denied. Today, they are struggling to find insurers willing to continue that coverage. For industries across the country struggling to rebuild, the public-private pandemic risk insurance program this bill creates is essential to creating the web of insurance that will indemnify them against pandemic risk now and in the future,” said Shannon Meade, vice president, public policy and legal advocacy, National Restaurant Association.


Congress must take swift action and begin contemplating a solution to provide all businesses protection against future pandemic risks. The development of a public-private partnership to address this risk will provide certainty for businesses and organizations of all sizes and will ensure that we can meet future pandemic events with greater reliance. Not every pandemic will have worldwide impact, but when and where one occurs it is likely to result in a nearly total cessation of business. This legislation is the cornerstone of a proactive approach in managing the risk and impact of a pandemic or epidemic in the future,” said Leon Buck, vice president, government relations, banking and financial services, National Retail Federation.


“PRIA is an important step forward that helps to address possibly the largest unhedged risk exposure in the U.S. economy today. It is important for business policyholders to be able to secure the pandemic risk coverage necessary to maintain jobs and grow the economy. The Real Estate Roundtable and its 19 national real estate trade association partners have seen firsthand how a broad range of economic risks, including terrorism (TRIA) and floods (NFIP), underscore the need for public support when private markets fail. In those circumstances, a public-private partnership is essential to support the economy. PRIA is positive, forward-thinking legislation that Congress needs to pass,” said Jeffrey D. DeBoer, president and CEO, Real Estate Roundtable.


The BCC looks forward to continuing its bipartisan engagement on this important matter and extends its appreciation to Representative Maloney, her staff and the many others behind the scenes on Capitol Hill working to find solutions to this issue.


Download a PDF of the statements of support from the BCC members:

BCC_Members_Statements_of_Support_11.2.21
.pdf
Download PDF • 75KB

In this episode of Marsh’s Risk in Context podcast, Jeff Alpaugh and Arnold & Porter’s Charles Landgraf discuss the pandemic’s effects on businesses and the insurance marketplace, which highlights the need for a strong, government-backed pandemic risk framework to protect companies and the economy.


Key Takeaways:

  • In addition to being a human tragedy, the pandemic has had a profound effect on businesses and the US and global economies. It has also prompted insurers to broadly exclude pandemic risk from many policy types.

  • A public-private partnership can allow pandemic risk to be managed. And it can enable businesses to plan for the future with confidence.

  • As the Business Continuity Coalition and others advocate for a solution, risk managers and others can also get involved by contacting their members of Congress.


Listen to the episode


The Business Continuity Coalition (BCC) participated in a hearing July 22 titled “Examining Frameworks to Address Future Pandemic Risk” held by the United States Senate Committee on Banking, Housing and Urban Affairs. At the hearing, the BCC was represented by Charles Landgraf from Arnold & Porter.

During his prepared testimony, Landgraf addressed the group and said, “Now is the time for Congress and America’s world-class insurance industry to act boldly -- with policyholders and taxpayers -- to co-create a public-private partnership. The COVID pandemic exposed and indeed exacerbated a crippling “protection gap” (or gaps) in what the business and non-profit sectors had rightly or wrongly assumed to be a resilient financial protection system of commercial insurance. The business interruption coverage proved elusive, and coverage in other lines of insurance has been withdrawn or restricted going forward.”

He emphasized how the BCC brings many voices to the policy discussion with 44 trade associations and major companies across many sectors of the economy representing more than 70 million workers, from healthcare and dining/hospitality – the two largest employment sectors in the economy – to manufacturing, construction, finance, real estate, media and film, live entertainment, professional sports, and professional services, to name some of the sectors represented in the BCC.

Landgraf also acknowledged the BCC’s understanding that the U.S. government and governments around the world are still dealing with recovery from the pandemic, but explained that now is the time to repair and improve the protection fabric for the economy and for jobs. He emphasized that the BCC is seeking to restore “good-quality insurance” that meets the needs of the real economy and ultimately with a more authentic alignment of expectations between businesses and insurers.

In addition to Landgraf representing the BCC, the National Restaurant Association (a BCC member) brought Ms. Adenah Bayoh, IHOP Franchisee and owner of several restaurants, to the hearing so she could explain how she found out at the beginning of the COVID crisis that her business interruption insurance, which cost her an average of $ 275,000 annually in premiums, did not apply to viruses and pandemics and she would receive no relief from her insurance companies even though her business was interrupted by the virus and required to be closed by the Governor of New Jersey.

In her statement, Bayoh spoke about her journey to become a small business owner and how she approached caring for her employees at the onset of the COVID-19 crisis. She stated, “At the outset of the crisis, I struggled to continue paying my employees from proceeds generated by the business given the mandated shutdown and the fear that gripped the dining public in those early days. Nevertheless, I made a courageous decision for the first month of the statewide shutdown to continue paying my employees despite the precarious situation. I agreed to pay all my employees their average weekly pay whether they worked or not. I did this to ensure that my staff, including single mothers, could put food on the table. Although I was unable to fully resume normal business operations, I felt a duty to help our valued team members until government programs could fill the gap. As an owner of several restaurants, I was nearly bankrupted by this, but I have no regrets.” Her moving testimony can be read in full (PDF).

Other participants in the July 22 hearing included:

  • Mr. Evan G. Greenberg, Chairman And Chief Executive Officer, Chubb

  • Dr. Robert Hartwig, Professor Of Insurance And Finance And Director Of The Risk And Uncertainty Management Center, University of South Carolina

  • Mr. Robert Gordon, Senior Vice President For Policy, Research And International, American Property Casualty Insurance Association

  • Mr. Martin South, President, United States & Canada Division, Marsh

Download a PDF of the testimony from the BCC.

Watch a replay the hearing.