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Update: Business Interruption — Treasury Defends Insurers

Posted By Administration, Tuesday, May 19, 2020


As you know there has been a push the last few weeks for insurers to pay business interruption claims even though a policy does not include coverage for a pandemic. The U.S. Treasury is worried about the ill-conceived idea and sent a letter to Congress on Monday of last week saying there are concerns that these proposals “fundamentally conflict with the contractual nature of insurance obligations.”

In other words, the U.S. Treasury does not believe there should be a retroactive rewriting of policies as some suggest. This is an effort to counter a statement by President Trump at a press conference in April. You have people that have never asked for business interruption insurance, and they’ve been paying a lot of money for a lot of years for the privilege of having it, and then when they finally need it the insurance company says ‘we’re not going to give it,’” the president said. “We can’t let that happen.”

That letter apparently has not deterred some members of Congress — pointing to the president’s comment — from saying insurers should pay those losses anyway.

Frederick Vaughan is the principal deputy assistant secretary in the U.S. Treasury’s Office of Legislative Affairs. He’s so worried about insurers and the devastation this might cause to the industry, that he sent a letter to Rep. Ted Budd who is on the House Financial Services Committee. Budd is opposed to such measures but others on his committee are not.

“While insurers should pay valid claims, we share your concerns that these proposals fundamentally conflict with the contractual nature of insurance obligations and could introduce stability risks to the industry,” the letter states.

Vaughn said the U.S. Treasury is looking forward to working with Congress and with states, and with the insurance industry to figure out “how best to move forward in addressing losses attributable to the current and potential future pandemics.”

Source: FOX Business — https://www.foxbusiness.com/features/insurers-coronavirus-related-business-interruption-claims-treasury

Source: Business Insurance — https://www.businessinsurance.com/article/20200511/NEWS06/912334504/US-Treasury-signals-concerns-over-COVID-19-coronavirus-pandemic-business-interru#Update: Business Interruption — Treasury Defends Insurers

As you know there has been a push the last few weeks for insurers to pay business interruption claims even though a policy does not include coverage for a pandemic. The U.S. Treasury is worried about the ill-conceived idea and sent a letter to Congress on Monday of last week saying there are concerns that these proposals “fundamentally conflict with the contractual nature of insurance obligations.”

In other words, the U.S. Treasury does not believe there should be a retroactive rewriting of policies as some suggest. This is an effort to counter a statement by President Trump at a press conference in April. You have people that have never asked for business interruption insurance, and they’ve been paying a lot of money for a lot of years for the privilege of having it, and then when they finally need it the insurance company says ‘we’re not going to give it,’” the president said. “We can’t let that happen.”

That letter apparently has not deterred some members of Congress — pointing to the president’s comment — from saying insurers should pay those losses anyway.

Frederick Vaughan is the principal deputy assistant secretary in the U.S. Treasury’s Office of Legislative Affairs. He’s so worried about insurers and the devastation this might cause to the industry, that he sent a letter to Rep. Ted Budd who is on the House Financial Services Committee. Budd is opposed to such measures but others on his committee are not.

“While insurers should pay valid claims, we share your concerns that these proposals fundamentally conflict with the contractual nature of insurance obligations and could introduce stability risks to the industry,” the letter states.

Vaughn said the U.S. Treasury is looking forward to working with Congress and with states, and with the insurance industry to figure out “how best to move forward in addressing losses attributable to the current and potential future pandemics.”

Source: FOX Business, Business Insurance

Tags:  business interruption Department of the Treasury  Business interruption insurance  U.S. Treasury & businss interruption insurance 

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