NOVEMBER 19, 2020 09:44 AM (EST)
AM Best: Insurance Industry Looks to Federal Government to Backstop Pandemic Risk (AM BestTV)
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 19, 2020 09:44 AM (EST)
The Pandemic Risk Insurance Act (PRIA) calls for a pandemic to be covered by business interruption insurance with a government backstop. Ahead of House Financial Services Subcommittee hearing on PRIA, Maloney, who is a senior member of the House Financial Services Committee, spoke about why this legislation is needed now.
“This legislation is so important now because we are in the middle of a pandemic, and there is no business disruption insurance,” said Maloney. “Many of our small and large businesses are going under. Congress created several loan and grant programs to help businesses, but these were not enough. Many businesses took out insurance policies that they thought covered business disruption, but these policies did not. Numerous businesses have had to close their doors permanently because they have not had the resources to keep themselves going. They have not been able to shield themselves from these pandemic related losses that they are having.”
Holzberger said AM Best believes a public-private partnership to address pandemic-related losses would be warranted.
“Looking at the scale and the magnitude of the losses sustained by businesses in the United States, as well as the sharp decline in GDP, particularly in the second quarter, the effects on the global and U.S. economies and the secondary effects on unemployment, the losses associated with this pandemic cannot be transferred to the insurance industry,” said Holzberger. “The industry would need a public-private partnership to deal with losses of this magnitude.”
Maloney added, “We cannot continue to expose the business community to this level of risk and expect them to be able to survive and recover. It is just not sustainable.”
Other people included in this episode:
To access a full copy of a recent and related Best’s Commentary, titled, “Retroactive Legislation Social Inflation: Credit Negatives For Insurers,” visit http://www3.ambest.com/bestweek/purchase.asp?record_code=296835 .
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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.