This week, Rep. Mike Thompson (D-CA) introduced H.R. 7412, the Business Interruption Relief Act, which would create a voluntary program for insurers in which they could retroactively pay business interruption (BI) claims and be reimbursed by the federal government.
PIA National opposed similar legislation introduced in the spring, and we oppose this legislation for many of the same reasons. Most importantly, the bill purports to quickly assist businesses in need, when it is not designed to help all or even most small businesses. Only about 30 percent of small businesses even has business interruption coverage. Rep. Thompson has said his bill would limit eligibility to businesses with (a) business interruption coverage that (b) includes civil authority shutdowns but (c) excludes virus-related damages. As such, only a small percentage of businesses would benefit in any way from this bill, and thousands of businessowners would be left struggling.
PIA National is also concerned with the ramifications of retroactively mandating BI coverage via statute, even when done voluntarily. Such legislation would call into question the reliability of commercial contractual relationships and threaten the financial stability of the insurance sector. And the downstream effects of such a law, which could set a precedent for legislative rewriting of all kinds of contracts, could be unintentionally catastrophic across economic sectors.
While we continue to focus on providing immediate relief to small businesses, enabling them to survive the current economic climate, we also recognize the need to develop ways to prevent these dire economic consequences from emerging again in a future pandemic. As such, PIA National supports H.R. 7011, the Pandemic Risk Insurance Act (PRIA), a private-public partnership program that would go into effect in 2021 and would protect businesses from the catastrophic economic losses that could result from future pandemics, without retroactively rewriting existing insurance contracts.
PIA National will urge policymakers to reject any proposal—voluntary or not—that would retroactively rewrite BI provisions and instead focus on assistance that will help the vast majority of affected small businesses and offers future-focused, sustainable solutions.