PIA National has joined other insurance groups to help establish the Business Continuity and Employee Protection and Recovery Fund. If passed by Congress this will be similar to the September 11th Victim Compensation Fund. It was put together by Congress shortly after the terrorist attacks of 9/11.
The proposal was outlined in a letter sent to President Donald Trump, Treasury Secretary Steven Mnuchin and several leaders in Congress. In the letter, the groups involved want a fund stablished that will operate out of the U.S. Treasury and will be administered by a special administrator. The dollars in the fund will be provided by the government.
The administrator will manage hundreds of billions of dollars and will work with insurers, agents and brokers to help small and large businesses fill out applications and with reviews of those applications.
This proposal will protect lost wages for employees unable to work because of COVID. It will also preserve jobs through payroll assistance for closed businesses that continue to retain their employees. Lastly, it is designed to prevent businesses from becoming insolvent due to a pandemic similar to what we’re going through now.
Mike Becker is the executive vice president and CEO of PIA National. He said, “PIA has always been about providing solutions to problems in a proactive way, more than ever during this difficult time. To that end, we’ve worked with our industry partners to develop a solution for businesses that have been hard hit by the negative economic consequences related to the coronavirus, while not upending insurance practices.”
The idea has been floating around a number of states and at the federal level since the virus hit the U.S. hard a couple of weeks ago. It is also a counter to the push by many to require insurers to pay for business interruption coverage for the virus where no such coverage exists.
“During times of crisis it is understandable that policymakers who are trying to help sometimes make rash proposals that have ramifications they don’t quite understand, which would harm both industry and policyholders in the long term,” Becker said. “Rather than a defensive response, PIA has instead helped create a positive alternative for these struggling businesses that doesn’t upend existing insurance contracts and practices.”
The hope is that the bill will be ready in the next month or so.
“PIA is already working with congressional allies to include this proposal in the next round of coronavirus legislation. We hope Congress acts on this sensible solution to a serious problem,” Becker said.
The association is joined by 30 policyholder groups in insurance and in retail and other sectors hit hard by the pandemic.
Jimi Grande is a senior vice president for the National Association of Mutual Insurance Companies (NAMIC). “The purpose of this package is so that no business, think of a restaurant or any type of small business, has to lay people off and close the doors,” he said. “The idea is you keep them open and allow them to maintain their payroll and have revenue at a time when nobody can occupy or visit their business.”
Others signing onto the idea are the American Property Casualty Insurance Association (APCIA), the Council of Insurance Agents and Brokers (CIAB), the Reinsurance Association of America and the Wholesale Specialty & Insurance Association.
Non-insurance groups signing on are the American Hotel & Lodging Association, the National Association of Realtors, the National Association of Theatre Owners and the American Booksellers Association.
No dollar figure was specified in the letter but it said, “Without broad-based and expeditious federal action, long-term damage to the financial markets, rampant unemployment, and irreparable harm to communities are almost certain. Although the loan programs instituted by the CARES Act provide a down payment on economic support for Main Street businesses, additional liquidity will be required for impaired industries and businesses to avoid an unprecedented systemic, economic crisis.”
David Sampson of the APCIA said, “The Recovery Fund will leverage the ability of the private sector to scale and deploy immediate liquidity to our communities,” Sampson said. “Property/casualty insurers are in the solutions business to protect our customers — families, individuals, and business owners. We are proud to stand with our policyholders through this broad coalition spanning multiple sectors.”
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