Seven GOP senators sent a letter to President TrumpDonald John TrumpCalifornia governor praises Trump’s efforts to help state amid coronavirus crisis Trump threatens to withhold visas for countries that don’t quickly repatriate citizens Trump admin looks to cut farmworker pay to help industry during pandemic: report MORE on Friday asking that he commit to protecting the insurance industry from proposals in state legislatures that would require insurance companies to retroactively cover small-business losses due to the coronavirus pandemic.
Many small-business insurance policies do not cover pandemics when it comes to losses from business interruptions.
State lawmakers in New York, New Jersey, Ohio and Massachusetts have introduced bills that would retroactively require small-business insurance policies to cover losses due to closures from the coronavirus.
The letter to Trump, obtained by The Hill, warns that the new state-level legislation would result in enormous financial losses for the business insurance industry. The letter is signed by Sens. Tim ScottTimothy (Tim) Eugene ScottThe Hill’s 12:30 Report: US braces for ‘hardest’ week yet How much damage? The true cost of the Senate’s coronavirus relief bill Senate unanimously passes T coronavirus stimulus package MORE (R-S.C.), Mike CrapoMichael (Mike) Dean CrapoLobbying blitz yields wins for airlines, corporations, banks, unions Stimulus empowers Treasury to rescue airlines with billion in direct assistance White House, Senate reach deal on trillion stimulus package MORE (R-Idaho), Thom TillisThomas (Thom) Roland TillisHouse Dems introduce anti-price gouging legislation North Carolina Senate race emerges as 2020 bellwether The Hill’s Campaign Report: North Carolina emerges as key battleground for Senate control MORE (R-N.C.), Mike RoundsMarion (Mike) Michael RoundsZoom, grocery delivery, self-isolation: How lawmakers are surviving coronavirus GOP senators begin informal talks on new coronavirus stimulus Five things being discussed for a new coronavirus relief bill MORE (R-S.C.), Pat ToomeyPatrick (Pat) Joseph ToomeyNSA improperly collected US phone records in October, new documents show Overnight Defense: Pick for South Korean envoy splits with Trump on nuclear threat | McCain blasts move to suspend Korean military exercises | White House defends Trump salute of North Korean general WH backpedals on Trump’s ‘due process’ remark on guns MORE (R-Pa.), Ben SasseBenjamin (Ben) Eric SasseAmerica’s governors should fix unemployment insurance Mnuchin emerges as key asset in Trump’s war against coronavirus House Republican urges Pompeo to take steps to limit misinformation from China on coronavirus MORE (R-Neb.), and David Perdue (R-Ga.).
The GOP senators argued that the proposed changes “undermine our understanding of contractual obligations” and would serve to “help one segment of the economy by seriously harming another.”
They said the insurance companies did not charge premiums associated with pandemic risks and therefore do not have the capital required to cover losses due to the coronavirus closures.
“If the insurance industry were now forced retroactively to cover perils that were never accounted for commercial insurers could experience significant economic strain and/or insolvencies, given the magnitude of the current cumulative estimated claims,” the senators wrote.
“Adding another point of stress during these times, this would likely put our businesses in an even worse position — draining the U.S. insurance reserves to pay these claims could leave us in a position of having inadequate reserves to cover claims that are actually intended to be covered, such as damage from wind, fire, hail, and other covered perils,” they added.
Under the state-level bills, insurers would be able to seek recompensation directly from the states, which would pay out through new fees on the insurance industry.
The idea has been met with fierce opposition from insurance industry lobbyists.
The GOP senators argued that Congress has already addressed covering small-business losses through billions of dollars’ worth of new lending facilities.
The senators warned that retroactively requiring insurance companies to cover business closure losses because of the pandemic would “create major unintended consequences for new contractual relationships.”
They warned that the changes would be “litigated in the courts for years,” guaranteeing that “no money would make it to small businesses that need it.”
“We stand ready and willing to work with you and our Congressional colleagues to ensure that U.S. small businesses have the funds they need to survive this difficult time,” the senators wrote.
“However, we cannot help one segment of the economy by seriously harming another. We must continue to work diligently to get the PPP funds out to as many small businesses as quickly as possible. If it becomes clear at some future point that we need additional funds or facilities to get necessary federal money in the hands of small businesses, we will work to achieve that goal at that time,” they added.