US must remain open for business: industry association bosses propose a solution

COVID-19 has had a devastating effect on lives, jobs, businesses, and the economy. Nearly half of America’s 31.7 million small businesses have closed permanently or temporarily because of the pandemic, resulting in job losses and layoffs.

Main streets across the US have been hit particularly hard, with losses from COVID-19 shutdowns for businesses with fewer than 100 employees estimated at between $255 billion and $431 billion per month at the pandemic’s peak.

Federal stimulus packages remain a necessary economic bridge to help struggling businesses recover from the unprecedented government-mandated shutdowns during the crisis. And while more financial assistance is needed, policymakers and the business community also need to establish a programme to provide financial protection for businesses from future viral outbreaks and pandemics.

Business interruption (BI) insurance is often contained in property insurance policies that cover physical damage from disasters such as hurricanes or wildfires, but these policies generally do not cover viruses and often explicitly exclude them.

Insurers and agents are in the business of finding risk solutions for consumers, but some risks defy insurability. The business continuity losses associated with pandemics are one such risk. Due to the inherent uninsurable nature of pandemic risk, the cost of any insurance product would likely be unaffordable, leaving a vast majority of businesses unable to purchase coverage.

Compounding this insurability issue is the need to provide swift and impactful financial assistance to businesses at their time of greatest need. Private insurance does not have the scale or ability to underwrite risks of this nature and magnitude, nor could insurers settle millions of simultaneous, complex BI insurance claims in such a widespread, urgent situation.

An affordable solution
We need an affordable solution to keep all businesses—small and large—ready to recover and re-open for business. Small and medium-sized businesses and non-profits are most at-risk in an economic crisis. Unlike some larger businesses with greater access to capital, they will not be able to afford an extended shutdown.

Protecting these Main Street businesses will require an approach that includes a fully federally-funded affordable base layer of coverage that would ensure wide availability and business take-up, as well a public-private partnership to provide additional coverage to businesses. Together, this multilayer solution would create a sturdy structure that the private market could potentially build on over time.

Insurers and agents are listening to and proactively working with our customers to address their concerns and to present to policymakers a programme that works for all interests.

Considering the many proposals that have been put forward, our organisations have developed a comprehensive solution we believe would make pandemic protection for American businesses available and affordable—the Business Continuity Protection Program (BCPP).

The BCPP is designed to bolster the country’s economic resilience by providing timely and efficient financial protection including payroll, benefits, and expense support to the private sector in the event of a future declared public health emergency.

Our plan is a simple to administer, affordable solution for the thousands of America’s small and mid-size enterprises that are vitally important to local communities and their economies. The programme is designed to keep all businesses on Main Street open.

We will continue to work with Congress to forge a solution that works for all stakeholders.

It is critical that Congress enacts a programme that works for all stakeholders, large and small, and provides the economic security that our country needs.

David Sampson is the president and chief executive officer of the American Property Casualty Insurance Association (APCIA)

Charles Chamness is the president and chief executive officer of the National Association of Mutual Insurance Companies (NAMIC)

Bob Rusbuldt is president and chief executive officer of the Independent Insurance Agents & Brokers of America (Big ‘I’)