{"id":326,"date":"2020-04-14T18:26:23","date_gmt":"2020-04-14T22:26:23","guid":{"rendered":"http:\/\/blogs.duanemorris.com\/insurancelaw\/?p=326"},"modified":"2020-04-14T18:26:23","modified_gmt":"2020-04-14T22:26:23","slug":"lawmakers-continue-efforts-to-compel-coronavirus-business-interruption-insurance","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/insurancelaw\/2020\/04\/14\/lawmakers-continue-efforts-to-compel-coronavirus-business-interruption-insurance\/","title":{"rendered":"Lawmakers Continue Efforts to Compel Coronavirus Business Interruption Insurance"},"content":{"rendered":"

By Dominica Anderson<\/a>, Philip Matthews<\/a> and Daniel Heidtke<\/a><\/strong><\/em><\/p>\n

We previously wrote about the growing number of lawsuits by insureds<\/a>\u00a0seeking business interruption insurance coverage for business losses in response to the novel coronavirus\u00a0and ways that state and federal governments were beginning to consider ways that they might compel such coverage<\/a>.<\/p>\n

The potential cost of business continuity losses is enormous. The Congressional Research Service issued a report to Congress on the financial impact to insurers for the cost of covering business interruption claims. The report explains that some industry sources estimate that the cost of covering business interruption claims ranges from $110 billion to $290 billion per month.\u00a0 <\/em>In a more recent letter, insurance industry leaders explained, \u201crecent estimates show that business continuity losses just for small businesses of 100 or fewer employees could amount to between $220 billion to $383 billion per month.\u00a0 Meanwhile, the total surplus for all of the U.S. home, auto, and business insurers combined to pay all future losses is only $800 billion.\u201d <\/p>\n

Seven states have taken steps to enact legislation compelling business interruption and contingent business interruption insurance for COVID-19 losses. Those states include Louisiana (SB477<\/a>; HB858<\/a>), Massachusetts (SD2888<\/a>), New Jersey (AB3844<\/a>), New York (AB10226<\/a>), Ohio (HB589<\/a>), Pennsylvania (HB2372<\/a>), and South Carolina (SB1188<\/a>).<\/p>\n

The various bills proposed throughout the country contain strikingly similar language.\u00a0 In Louisiana, for example, SB477 provides that existing policies affording coverage for business interruption losses \u201cshall be construed to include among the perils covered under that policy, coverage for business interruption due to imminent threat posed by COVID-19[.]\u201d Massachusetts\u2019s SD2888, New Jersey\u2019s AB3844, New York\u2019s AB10266, Ohio\u2019s HB589, and Pennsylvania\u2019s HB2372, are nearly identical. Another bill (Louisiana\u2019s SB506<\/a>), provides that property insurance policies \u201cshall\u201d cover the \u201ccost of disinfecting fumigation of the building if a person who works or resides in the building has a positive diagnosis for COVID-19[.]\u201d<\/p>\n

South Carolina\u2019s SB1188 goes further than the others.\u00a0 In addition to compelling coverage for COVID-19 losses, SB1188 also provides that no insurer may deny a business interruption or loss of use claim on account of \u201c(1) COVID-19 being a virus, even if the relevant insurance policy excludes losses resulting from viruses; (2) there being no physical damage to the property of the insured or to any other relevant property; or (3) orders issued by any civil authority, or acts or decisions of a governmental entity.\u201d<\/p>\n

The proposed laws do not apply to all insureds. The proposed laws contain limits based upon the number of full-time employees working for the insured. New Jersey, Ohio and Pennsylvania\u2019s proposed laws are limited to insureds with 100 or fewer employees; Massachusetts and South Carolina limit their proposed laws to insureds with 150 or fewer employees; and New York\u2019s limit is 250 employees or fewer.\u00a0 As originally and currently proposed, Louisiana\u2019s SB477 did not contain any such limit, but Louisiana\u2019s HB858 contains a limit of 100 or fewer employees.<\/p>\n

State departments of insurance have also been active. For example, both the California Department of Insurance and the Washington State Office of the Insurance Commissioner (OIC) asked insurers to provide information concerning the commercial property insurance policies issued in each respective state, and details about any business interruption coverage such policies might provide. Responses to the California Department of Insurance\u2019s request were due April 9. And, despite efforts by state legislatures set forth above, Washington\u2019s OIC website makes clear: \u201c[t]he Office of the Insurance Commissioner does not have the authority to mandate insurers sell or retroactively cover pandemic coverage or policy endorsements.\u201d<\/p>\n

As an alternative to coverage by legislative fiat, insurance industry and commercial policyholder groups have asked the federal government to create a \u201crecovery fund\u201d designed to further assist businesses. The \u201cCOVID-19 Business and Employee Continuity and Recovery Fund,\u201d as proposed in a letter to President Donald J. Trump, Treasury Secretary Steven T. Mnuchin and congressional leaders, would \u201csupplement the efforts to expand lending in the CARES Act\u201d and \u201cwould be designed to help businesses retain and rehire employees, maintain worker benefits, and meet operating expense obligations.\u201d<\/p>\n

Congress is wading in. Recently, seven U.S. Senators wrote<\/a> to President Trump explaining, \u201c[i]f 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.\u201d Meanwhile, a draft of the \u201cPandemic Risk Insurance Act of 2020,\u201d is circulating. The draft Act seeks to establish \u201ca Federal program that provides for a transparent system of shared public and private compensation for business interruption losses resulting from a pandemic or outbreak of communicable disease.\u201d The Act\u2019s \u201cprogram\u201d would be similar to the Terrorism Risk Insurance Act, creating a government \u201cbackstop\u201d for insured losses.<\/p>\n

There is certainly a lot of activity in the courts, administrative agencies and\u00a0in the various state legislatures and Congress addressing the novel coronavirus.\u00a0And, we continue to monitor this fast-developing situation. In the end, only time will tell how the economic problem from the novel coronavirus is addressed.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Dominica Anderson, Philip Matthews and Daniel Heidtke We previously wrote about the growing number of lawsuits by insureds\u00a0seeking business interruption insurance coverage for business losses in response to the novel coronavirus\u00a0and ways that state and federal governments were beginning to consider ways that they might compel such coverage. The potential cost of business continuity … <\/p>\n

Continue reading “Lawmakers Continue Efforts to Compel Coronavirus Business Interruption Insurance”<\/span><\/a><\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[390,158,382,381,308,230,277],"ppma_author":[417],"class_list":["post-326","post","type-post","status-publish","format-standard","hentry","category-general","tag-business-interruption-insurance","tag-claims","tag-coronavirus","tag-covid-19","tag-daniel-heidtke","tag-dominica-anderson","tag-philip-matthews"],"authors":[{"term_id":417,"user_id":6,"is_guest":0,"slug":"duanemorris3","display_name":"Duane Morris","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/843ff6e7a8fe5fc92109b47a45f34b6cf0ea499e6e788db23456c838b0ae6747?s=96&d=blank&r=g","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/326","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/comments?post=326"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/326\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/media?parent=326"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/categories?post=326"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/tags?post=326"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/ppma_author?post=326"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}