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.


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Download a copy of the full testimony.

The newly formed Business Continuity Coalition (BCC) was announced October 28, 2020, officially launching the cross-industry coalition designed to help keep jobs and businesses protected from future economic shutdowns. The BCC has brought more than two dozen industries and companies together to develop a plan with policymakers and other stakeholders to protect American jobs and to limit future economic damage from pandemics and other national emergencies that cause business interruptions.

BCC members represent more than 50 million workers in the restaurant, entertainment, hospitality, gaming, retail, communications, broadcasting and real estate industries. The BCC is advocating for a public/private business continuity insurance program that, in the event of a government-ordered shutdown, will enable employers to keep payrolls and supply chains intact, helping to limit job losses and furloughs, reducing stress on the financial system, and speeding economic recovery when government-imposed limitations on operations are lifted.

In related news, the Subcommittee on Housing, Community Development and Insurance announced October 27 that it will convene in mid-November for a virtual hearing - “Insuring against a Pandemic: Challenges and Solutions for Policyholders and Insurers” - giving this topic more steam in the weeks and months ahead.


Download the press release below.


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Updated: Nov 19, 2020

In early September 2020, Representative Carolyn B. Maloney (D-NY), senior member of the House Financial Services Committee, was joined by stakeholders from the business community, including BCC members from the Independent Film & Television Alliance, Nareit, National Multifamily Housing Council, and the National Retail Federation, along with representatives from the insurance industry to emphasize the need for Congress to act quickly, and on a bi-partisan basis, to create a framework for insurance companies to offer business interruption insurance policies that cover future pandemics and government-mandated shutdowns.

The Federal backstop would make certain that these business interruption policies are both widely available and affordable for small businesses, and maintain marketplace stability.

Comments during the roundtable focused on Rep. Maloney’s legislative proposal, H.R. 7011, the Pandemic Risk Insurance Act of 2020 (PRIA), which she introduced in May 2020.

The following BCC members provided their perspectives during the conversation:

· Jean Prewitt, President and CEO, Independent Film & Television Alliance (IFTA)

· Steven A. Wechsler, President and CEO, Nareit

· Kevin Donnelly, Vice President for Government Affairs, National Multifamily Housing Council (NMHC)

· Leon Buck, Vice President for Government Relations, Banking and Financial Services, National Retail Federation

Video of the Sept. 10 roundtable discussion is available below: