WASHINGTON, D.C. — David A. Sampson, president and CEO of the American Property Casualty Insurance Association (APCIA) issued the following statement in opposition to the Washington, D.C. Council’s Business Interruption Insurance Amendment Emergency Act of 2020. The legislation would mandate coverage for business losses due to COVID-19 under a business interruption policy in force as of March 16, 2020. The bill is included in the Coronavirus Omnibus Emergency Amendment Act of 2020.
“APCIA strongly opposes the D.C. 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 D.C. families, individuals, motorists, and businesses.
“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 the D.C. small businesses with fewer than 250 employees targeted by this legislation could range from $300 million to $1.1 billion per month. These numbers dwarf the premiums for all relevant commercial property risks in the key insurance lines for D.C., which are estimated at $16 million a month.
“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.
“Insurers understand the urgency of helping businesses and individuals recover. Only the federal government can be the bridge for a crisis of this proportion. The property casualty industry supports federal assistance programs 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.
“In addition, insurers understand the urgency of helping businesses and individuals recover from this unprecedented crisis and preventing a larger shut down of the economy. Insurers have provided more than $8 billion 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.
“Our industry stands ready to work with the D.C. 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?”