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An alternative federal proposal designed to protect businesses financially was unveiled by three major insurance industry groups.
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Protection must be purchased at least 90 days before the presidential declaration, according to the proposal.
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A draft bill outlining the proposed Pandemic Risk Insurance Act of 2020 has been circulating on Capitol Hill.
An alternative federal proposal designed to protect businesses financially against widespread economic shutdowns due to a future pandemic was unveiled Thursday by three major insurance industry groups.
The Business Continuity Protection Program would provide immediate revenue relief for payroll, employee benefits and operating expenses following a viral emergency declaration by the President, according to a statement from the National Association of Mutual Insurance Companies, the American Property Casualty Insurance Association and the Independent Insurance Agents & Brokers of America Inc.
Under the plan, which would be run by the Federal Emergency Management Agency and funded by taxpayer dollars, businesses would purchase revenue replacement for three months’ relief for up to 80% of payroll and other expenses, through insurers that voluntarily participate in the BCPP.
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Protection must be purchased at least 90 days before the presidential declaration, according to the proposal.
Businesses would be required to certify that they would use any funds received for retaining employees and paying necessary operating expenses and that they would follow federal pandemic guidelines.
Pandemics simply are not insurable risks; they are too widespread, too severe, and too unpredictable for the insurance industry to underwrite, Pandemics are a national problem, and we need a national solution.
- Charles Chamness, NAMIC’s president and CEO
The proposal comes after insurer groups indicated they were not supportive of a legislative proposal to create a federal pandemic backstop akin to the Terrorism Risk Insurance program created after the 9/11 terrorist attacks under the Terrorism Risk Insurance Act.
A draft bill outlining the proposed Pandemic Risk Insurance Act of 2020 has been circulating on Capitol Hill.
“A TRIA-like program, with an industry financial role, does not square with the fundamental notion that pandemics are not insurable risks,” the trade groups said in the statement.
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The Risk & Insurance Management Society Inc. said Thursday its external affairs committee will begin reviewing the alternative proposal.
“Our support for a PRIA solution doesn’t preclude us from backing other legislative proposals, especially those that are favorable to the risk management community,” said Whitney Craig, RIMS director of government affairs, in an emailed response.
Valid use of funds through the BCPP would be audited and enforced through fines, required repayment and criminal penalties, according to information provided by the trade groups.
NAMIC, the APCIA and the Big “I” said they will be working with members of Congress and the administration to enact the BCPP
About National Association of Mutual Insurance Companies (NAMIC)
Founded in 1895, the National Association of Mutual Insurance Companies (NAMIC) is a full-service national trade association serving the property/casualty insurance industry with more than 1,400 member companies that underwrite nearly 40 percent of the property/casualty insurance premium in the United States. NAMIC members are small farm mutual companies, state and regional insurance companies, risk retention groups, national writers, reinsurance companies, and international insurance giants.
About American Property Casualty Insurance Association (APCI)
Representing nearly 60 percent of the U.S. property casualty insurance market, the American Property Casualty Insurance Association (APCI) promotes and protects the viability of private competition for the benefit of consumers and insurers. APCI represents the broadest cross-section of home, auto, and business insurers of any national trade association. APCI members represent all sizes, structures, and regions, which protect families, communities, and businesses in the U.S. and across the globe.