US insurer trade bodies unveil federal solution for 'uninsurable' pandemic risks

US insurance trade associations have together proposed a new industry-backed federal programme to help businesses meet the financial challenges from future pandemics. Industry bodies believe that pandemic risks are "inherently uninsurable" as they are "too widespread, severe, and unpredictable" for the insurance industry to underwrite.

The proposed Business Continuity Protection Program (BCPP) would provide revenue replacement assistance for payroll, employee benefits, and operating expenses following a presidential viral emergency declaration.

The BCPP would be run by the Federal Emergency Management Agency (FEMA), with limited administrative assistance from private contractors.

The National Association of Mutual Insurance Companies (NAMIC), the American Property Casualty Insurance Association (APCIA), and the Independent Insurance Agents & Brokers of America believe that the programme is a solution that can work for everyone — customers of all sizes and structures — to provide protection against widespread economic shutdowns due to a future viral outbreak.

“Pandemics simply are not insurable risks; they are too widespread, too severe, and too unpredictable for the insurance industry to underwrite,” said Charles Chamness, NAMIC’s president and CEO. “As we’ve seen in the past few months, pandemics are a national problem, and we need a national solution. NAMIC, APCIA, and the Big ‘I’ had one goal in mind in developing the BCPP – crafting a solution that would provide meaningful support for employees, businesses, and the economy as a whole.”

David Sampson, APCIA president and CEO, added: “We need a sustainable solution that provides simplicity, certainty, and immediate relief to impacted businesses. The BCPP is designed to bolster the country’s economic resilience through timely and efficient financial protection and payroll support in the event of a future public health emergency. We look forward to continued dialogue with the business community to meet their needs in this vitally important public policy discussion.”

Under the BCPP, the Federal Emergency Management Agency, with limited administrative assistance from private contractors, would provide the critical mechanism of administering relief to businesses. And, the BCPP would be able to purchase private reinsurance to protect federal taxpayers.

The BCPP would provide business revenue replacement assistance that would reimburse up to 80 percent of payroll, benefits, and expenses for three months.

Bob Rusbuldt, Big “I” president & CEO, commented: “The small business community is looking to our industry to provide leadership to ensure there is immediate assistance available during future pandemics. The BCPP is a simple, efficient, and effective plan to provide the needed financial security for American businesses. This program gets immediate funding to businesses when they need it most.”