Backstops

Seven senators have spurred their peers in an effort to convince President Trump to protect the insurance industry from proposals in state legislatures that would require insurance companies to cover small-business losses due to the coronavirus pandemic retroactively, using BI and WC formats extended for the purpose. At the same time, state lawmakers in New York and New Jersey have introduced bills that would require small-business insurance policies to cover losses due to closures from the coronavirus retroactively.

And, we would add, illegally, irrationally and capriciously.

The new state-level legislation would precipitate financial losses for the business insurance industry, a fact recognized initially by Sens. Tim Scott (R-S.C.), Mike Crapo (R-Idaho), Thom Tillis (R-N.C.), Mike Rounds (R-S.C.), Pat Toomey (R-Pa.), Ben Sasse (R-Neb.), and David Perdue (R-Ga.). The senators argued that the proposed changes “undermine our understanding of contractual obligations” and would serve to “help one segment of the economy by seriously harming another”, written in a letter reportedly received by the Hill, a Washington publication. They said the insurance companies did not charge premiums associated with pandemic risks and therefore do not have the capital required to cover losses due to the coronavirus closures.“If the insurance industry were now forced retroactively to cover perils that were never accounted for commercial insurers could experience significant economic strain and/or insolvencies, given the magnitude of the current cumulative estimated claims,” the senators wrote.

Under the state-level bills, insurers would be able to seek re-compensation directly from the states, which would pay out through new fees on the insurance industry. The idea has been met with fierce opposition from insurance industry lobbyists, but they might do well to concentrate upon a form of TRIA as a backs top for pandemics.

Be sure to follow your legislators’ actions on this.

And be sure to read our Looking Back section each issue.

We present a look at the way the industry was and the people who made it great.

75 years ago, WWII was ending and the sense of patriotism surfaced everywhere, even on our pages.

Some local history is included. Hope you find it as interesting as we do. SA