American Property Casualty Insurance Association
  • Staff Contact: Eileen Gilligan     
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  • May 11, 2020
  • NAIC, IAIS, and AM Best: Mandating Retroactive Business Interruption Insurance Could Harm Consumers
  • WASHINGTON, DC — David A. Sampson, president and CEO of the American Property Casualty Insurance Association (APCIA) released the following statement regarding the International Association of Insurance Supervisors (IAIS) joining AM Best Rating Services and the National Association of Insurance Commissioners (NAIC) with perspectives on the impact of potential retroactive business interruption proposals.

    “The IAIS has joined AM Best and state insurance regulators in underscoring the broad, negative repercussions of public policy proposals to require retroactive insurance coverage on COVID-related claims,” said David A. Sampson, president and CEO of APCIA. “These proposals could impact the financial ability of insurers to meet their everyday promises to families, individuals, and businesses. Insurance industry stability is especially important in a time of increased natural catastrophe frequency, with flood season underway, hurricane season around the corner, and wildfires posing year-round risk.”

    The IAIS underscored this week that “requiring insurers to cover such claims could create material solvency risks and significantly undermine the ability of insurers to pay other types of claims.” The IAIS concluded that, “such initiatives could ultimately threaten policyholder protection and financial stability, further aggravating the financial and economic impacts of COVID-19.” And furthermore, they noted that “this widespread pandemic has highlighted the limits on the types of coverage that can reasonably be offered by the insurance sector alone.”

    AM Best Rating Services issued commentary earlier this week noting that “legislation forcing insurers to pay for unintended business interruption losses would have a destructive impact on the industry’s financial strength and affects its ability to fulfill policyholders’ interests. In the long term, retroactive coverage could affect pricing, availability of insurance and confidence in underwriting.”

    The NAIC recently stated that “insurance works well and remains affordable when a relatively small number of claims are spread across a broader group, and therefore it is not typically well suited for a global pandemic where virtually every policyholder suffers significant losses at the same time for an extended period. While the U.S. insurance sector remains strong, if insurance companies are required to cover such claims, such an action would create substantial solvency risks for the sector, significantly undermine the ability of insurers to pay other types of claims, and potentially exacerbate the negative financial and economic impacts the country is currently experiencing.”

  • The American Property Casualty Insurance Association (APCIA) is the primary national trade association for home, auto, and business insurers. APCIA promotes and protects the viability of private competition for the benefit of consumers and insurers, with a legacy dating back 150 years. APCIA members represent all sizes, structures, and regions—protecting families, communities, and businesses in the U.S. and across the globe.
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