COVID-19 has had a devastating effect on lives, jobs, businesses and the economy. Nearly half of America’s 31.7 million small businesses closed permanently or temporarily because of the pandemic, resulting in job losses and layoffs.
Main Streets across America 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 initial peak earlier this year.
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 program to provide financial protection for businesses from future viral outbreaks and pandemics.
The House Financial Services Subcommittee on Housing, Community Development, and Insurance is holding a hearing this week to explore solutions for protecting businesses and their workers against a future pandemic. Insurers and agents will participate to advocate for the best solutions to financially protect their customers.
Insurers and agents are in the business of finding risk solutions for consumers, but some risks defy insurability. The business continuity losses associated with a government ordered widespread economic shutdown from a future pandemic is one such risk. Forcing insurers to absorb the losses for an inherently uninsurable risk, even at just a percentage of the losses, would be unaffordable for most businesses, particularly on Main Street.
Business interruption insurance is often contained in property insurance policies that cover physical damage from disasters like hurricanes or wildfires. But these policies generally do not cover business closures absent direct physical damage and often explicitly exclude losses related to viruses.
Insurance is designed to provide swift and impactful financial assistance to consumers at their time of greatest need. But private insurance is built on the premise that a small percentage of those paying in for a given year will experience a loss, and the universal nature of a pandemic makes it, by definition, uninsurable. Insurers do not have the scale or ability to adjust tens or hundreds of millions of simultaneous, complex insurance claims.
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 nonprofits 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.
Given the potential scale of the problem, 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 accessibility for businesses of all sizes.
Our organizations have developed a comprehensive solution we believe would make pandemic protection for American businesses available and affordable – the Business Continuity Protection Program.
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 program is designed to keep all businesses on Main Street open.
It is critical that Congress enacts a program that works for all stakeholders, large and small, and provides the economic security that our country needs. We urge Congress to consider the BCPP.
David Sampson is the president and CEO of the American Property Casualty Insurance Association. Charles Chamness is the president and CEO of the National Association of Mutual Insurance Companies. Bob Rusbuldt is president and CEO of the Independent Insurance Agents & Brokers of America, Inc.
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