PIA National Opposes Business Interruption Legislation

Bills would apply business interruption coverage where it doesn’t exist.
April 15, 2020

WASHINGTON -- The National Association of Professional Insurance Agents (PIA) has today announced it strenuously opposes legislation introduced separately by Reps. Mike Thompson (D-CA) and Brian Fitzpatrick (R-PA) that would empower the federal government to rewrite existing business interruption (BI) insurance provisions drafted with otherwise applicable exclusions.

“PIA is deeply engaged in wide-ranging efforts to assist the business community during this national crisis. Unfortunately, these two bills would apply business interruption coverage where it doesn’t exist, exacerbating existing disruptions and further delaying our nation’s economic recovery,” said PIA National Executive Vice President & CEO Mike Becker.

BI provisions typically do not cover losses resulting from risks like the coronavirus. Retroactively rewriting contracts undermines existing contractual relationships and risks injecting new uncertainties into our current economic crisis. Such proposals purport to quickly provide assistance to businesses in need, but in reality, such a response would not help all businesses; only one in three small businesses even has business interruption coverage.As such, only a small percentage of businesses would benefit in any way from it, andthousands of small businessowners would be left struggling.

“PIA believes policymakers should pursue legislative solutions that raise up all struggling businesses, not create statutory winners and losers. Proposals that deprive about two-thirds of all small businessowners of financial assistance are unacceptable,” said PIA National Vice President of Government Relations Jon Gentile. “Policymakers should ensure all small businesses receive relief during this challenging time. To that end, PIA has been working with others in the business community to develop the Business and Employee Continuity and Recovery Fund.

The COVID-19 Business and Employee Continuity and Recovery Fund (Recovery Fund) would be housed within the U.S. Department of the Treasury. Modeled on the September 11th Victim Compensation Fund, the Recovery Fund would be operated by the federal government and run by a presidential appointee authorized to enter into contracts with interested businesses to administer the Recovery Fund and facilitate the distribution of financial resources to affected businesses.

The Recovery Fund would provide short-term liquidity for small businesses by creating a simple form that could be electronically filed to help businesses maintain solvency while continuing to pay their employees. The Recovery Fund would protect lost wages for employees unable to work because of COVID-19 infection, quarantine, or operational shutdown; preserve jobs through payroll assistance for temporarily closed businesses that continue to retain their employees; and provide solvency assistance for businesses in danger of failing as a result of the pandemic.

“The Recovery Fund offers a solution to the current crisis facing small businesses and their employees, without rewriting insurance contracts and without depriving about two thirds of all small businesses of help. PIA rejects this limited business interruption proposal and calls on Congress to instead make policy that aids all suffering businesses during this difficult time by passing the Recovery Fund into law,” said Gentile.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance but specialize in coverage of automobiles, homes and businesses.PIA’s web address is www.pianet.com.

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