Three insurance industry trade bodies – the National Association of Mutual Insurance Companies (NAMIC), the American Property Casualty Insurance Association (APCIA), and the Independent Insurance Agents & Brokers of America, Inc. (Big “I") – have today unveiled a joint proposal for a federal pandemic insurance solution.
The new industry-backed Business Continuity Protection Program (BCPP) has been tailored specifically to help businesses meet the financial challenges from future pandemics. The solution, which is aimed at customers of all sizes and structures, will provide revenue replacement assistance for payroll, employee benefits, and operating expenses following a presidential viral emergency declaration.
“Pandemics simply are not insurable risks; they are too widespread, too severe, and too unpredictable for the insurance industry to underwrite,” said Charles Chamness, president and CEO of NAMIC. “As we’ve seen in the past few months, pandemics are a national problem, and we need a national solution. NAMIC, APCIA, and the Big ‘I’ had one goal in mind in developing the BCPP – crafting a solution that would provide meaningful support for employees, businesses, and the economy as a whole.”
There has been a lot of dialogue in the industry over the past few weeks about the creation of a federally backed pandemic insurance program. Some have suggested a program modeled after the Terrorism Risk Insurance Program, created after the 9/11 terrorist attacks under the Terrorism Risk Insurance Act (TRIA), but NAMIC, APCIA and the Big ‘I’ suggest that this doesn’t go far enough. They state that a TRIA-like program, where the insurance industry plays a financial role, does not square with the fundamental notion that pandemics are uninsurable.
“We need a sustainable solution that provides simplicity, certainty, and immediate relief to impacted businesses,” said David Sampson, APCIA’s president and CEO. “The BCPP is designed to bolster the country’s economic resilience through timely and efficient financial protection and payroll support in the event of a future public health emergency. We look forward to continued dialogue with the business community to meet their needs in this vitally important public policy discussion.”
Read more: Figuring out the new world post-coronavirus
The BCPP has been designed to provide immediate relief for employers that are directed to close because of a pandemic. It would provide business revenue replacement assistance that would reimburse up to 80 percent of payroll, benefits, and expenses for three months. Bob Rusbuldt, Big “I” president & CEO, described the BCPP as “a simple, efficient, and effective plan to provide the needed financial security for American businesses.”
Businesses would purchase their desired level of revenue replacement assistance through state-regulated insurance entities that voluntarily participate with the BCPP. FEMA would provide the mechanism of administering relief to businesses, and the BCPP would be able to purchase private reinsurance to protect federal taxpayers. More details about the BCCP can be found at the NAMIC, APCIA and the Big ‘I’ websites.