Insurers Group To Promote Pandemic Backstop Alternative to Congress

The American Property Casualty Insurance Association (APCIA) is planning virtual meetings with members of the US House Financial Services Committee to promote the Business Continuity Protection Program (BCPP), a proposed pandemic business interruption backstop.

The BCPP is designed to help businesses meet the financial challenges from future pandemics and bolster the US economy, the APCIA said.

In a statement, the APCIA said that it will conduct the "virtual fly-in" meetings with committee members over the next 2 weeks.

"The BCPP fills the gaps in the marketplace and avoids the uncertainty that has marked the current pandemic, including providing protection for COVID-19 recurrence and mutations in the next public health viral emergency," David Sampson, president and CEO of the APCIA said in the statement.

"Pandemics are inherently uninsurable risks," Mr. Sampson said. "Any risk where the same thing happens everywhere at the same time is by definition, uninsurable. Proposals envisioning insurers underwriting primary business continuity coverage for all businesses across the economy don't reflect the realities of the insurance marketplace."

The taxpayer-backed BCPP would address pandemic-related business interruption by providing participating businesses with revenue replacement assistance for payroll, employee benefits, and operating expenses following a presidential viral emergency declaration.

The BCPP would reimburse businesses for up to 80 percent of payroll, benefits, and expenses for 3 months. Under the proposed revenue backstop program, businesses could purchase their desired level of revenue replacement assistance through state-regulated insurance entities that voluntarily participate with the BCPP, with applications based on the prior year's tax return.

Relief would be triggered automatically following a federally declared public health emergency.

The Federal Emergency Management Agency, with limited administrative assistance from private contractors, would administer the program. Each year, the BCPP would consider purchasing reinsurance to protect federal taxpayers.

Under the plan, the BCPP would work with risk mitigation experts to develop pandemic and viral risk mitigation guidelines and safety standards for businesses that would be provided to purchasers of revenue protection at the time of application and payment.

The APCIA and other insurance industry trade groups offered their proposal as an alternative to pandemic business interruption backstop plans under discussion that would be based on the Terrorism Risk Insurance Act.

Such a measure was introduced in May 2020 by Rep. Carolyn B. Maloney (D–NY), a senior member of the Financial Services Committee. H.R. 7011, the Pandemic Risk Insurance Act of 2020, would create the Pandemic Risk Reinsurance Program (PRPP), a system of shared public and private compensation for business interruption losses resulting from future pandemics or public health emergencies.

The PRPP would provide a backstop for insurers that voluntarily offer pandemic business interruption coverage that would ensure sufficient capacity to cover losses and protect the US economy against a resurgence of COVID-19 or another future pandemic.