BI virus extension in DC would have ‘dramatic negative repercussions’: APCIA

The legislative branch of the Federal District of Washington, DC is considering draft legislation that would force insurers in the district to cover Covid-19 business interruption (BI) losses for small businesses. Washington, DC Council’s Business Interruption Insurance Amendment Emergency Act of 2020 would mandate coverage for business losses caused by Covid-19 under a BI policy in force as of 16 March 2020. The bill is included in the Coronavirus Omnibus Emergency Amendment Act of 2020. The American Property Casualty Insurance Association (APCIA) rapidly responded to the news by issuing a statement that said the move would be a disaster for residents of the district, suggesting it would rapidly become a no-go zone for insurers. APCIA pointed out that if BI cover was forced to extend to virus claims for businesses with 250 or fewer employees, that would lead to potential claims of $300m-$1.1bn per month. The premiums for all relevant commercial property risks in the key insurance lines for DC are estimated at $16m a month. “APCIA strongly opposes the DC Council’s legislative attempts to mandate retroactive coverage of business interruption losses. The council’s proposal could compromise the financial ability of insurers to meet their everyday promises and could have dramatic negative repercussions for all DC families, individuals, motorists and businesses,” stated David Sampson, president and CEO of APCIA. “Business interruption policies do not typically cover losses related to viruses, but rather require that physical damage must have occurred in order to trigger coverage for such losses. APCIA estimates that closure losses just for DC small businesses with fewer than 250 employees targeted by this legislation could range from $300m to $1.1bn per month. These numbers dwarf the premiums for all relevant commercial property risks in the key insurance lines for DC, which are estimated at $16m a month,” he continues. “Insurers stand by our policyholder contracts. We have always and will continue to pay the home, auto and business claims that are covered by these contracts. Insurance solvency is at risk if insurers are forced to pay claims not covered by current contracts,” added Mr Sampson. The association chief said insurers understand the urgency of helping businesses and individuals recover but added that only the Federal government can be the bridge for a crisis of this proportion. He pointed out that the property/casualty industry supports Federal assistance programmes that are delivering aid directly to vulnerable business communities, particularly affected small businesses. “Insurers also joined a broad business trade coalition calling for the Covid-19 Business and Employee Continuity and Recovery Fund, which would provide immediate financial assistance to impaired businesses to help them survive, reopen, and retain and rehire employees. Insurers are working with the business community toward enactment of the recovery fund in the next Federal Covid-19 relief package,” said Mr Sampson. “In addition, insurers understand the urgency of helping businesses and individuals recover from this unprecedented crisis and preventing a larger shutdown of the economy. Insurers have provided more than $8bn in new discounts and refunds for policyholders; expanding flexible payment solutions for families, individuals and businesses; suspending premium billing for small businesses such as restaurants and bars; and pausing cancellations of coverage for motorists due to non-payment and policy expiration,” he continued. “Our industry stands ready to work with the DC Council. But we oppose constitutionally flawed legislation that retroactively rewrites insurance contracts and threatens the stability of the sector, to the detriment of all policyholders. If our contracts can be swept aside, are any contracts safe?” asked Mr Sampson.

BI virus extension in DC would have ‘dramatic negative repercussions’: APCIA

Want to read this article?

Read Next

US workers comp renewals remain steady at midyear

Insured Texan flood losses limited by ‘extremely low’ take-up

War risk rates double after Red Sea Houthis sink two ships: reports

London follow market digital MGA launched

Guy Carpenter’s global property cat ROL falls 8.1%

US workers comp renewals remain steady at midyear

Insured Texan flood losses limited by ‘extremely low’ take-up

War risk rates double after Red Sea Houthis sink two ships: reports

London follow market digital MGA launched

Guy Carpenter’s global property cat ROL falls 8.1%

Keep yourself informed

Sign up for Commercial Risk’s newsletters

Want to read this article?

Read Next

US workers comp renewals remain steady at midyear

Insured Texan flood losses limited by ‘extremely low’ take-up

War risk rates double after Red Sea Houthis sink two ships: reports

London follow market digital MGA launched

Guy Carpenter’s global property cat ROL falls 8.1%

Related Articles

Keep yourself informed

Sign up for Commercial Risk’s newsletters