Companies and risk management personnel continue to struggle to deal with the complexity of the COVID-19 pandemic as many existing insurances do not cover its impact, a senior risk manager for a restaurant chain said on Thursday.
The comments came during a virtual discussion on the need for a public / private program to manage pandemic risk insurance hosted by Carolyn B. Maloney (D-New York), a member of the House Financial Services Committee.
Risk and Insurance Management Society Inc. does not agree with those who say pandemics are not insurable, says Patrick Sterling, head of risk management for Texas Roadhouse, a Louisville, Kentucky-based restaurant chain, and a member of the RIMS board. [1
Since March, insurers have been excluded from coverage for the film industry of any loss caused by "contagious diseases", says Jean Prewitt, President and CEO of the Independent Film & Television Alliance.
"We need government support to create incentives for the private insurance industry to resume writing the necessary insurance for the film industry at commercially reasonable prices and to allow film and television production to advance in the United States," Prewitt said.
A wide range of companies have struggled to cope with the economic challenges posed by the pandemic. and the associated government-ordered business suspensions, says Scott Sinder, General Counsel for the Council of Insurance Agents and Brokers.
"There was little or no insurance available before the crisis to cover the associated economic losses," he said.
If there is a next time, a mechanism must be in place to minimize financial disruption and to compensate companies for the associated losses, Sinder said.
Al the insurance market can not fully provide companies with the protection they need from the enormous costs of pandemics, says Tarique Nageer, Advisor and Leader of Terrorism Placement, Real Estate Practice, at Marsh & McLennan Cos Inc.
"Credit and Power US Only: "The government can help create the necessary risk program to take advantage of the economic and social benefits of insurance to mitigate pandemic – related economic losses," said Nageer.
But the insurance industry also has a role to play, he added.
Although the federal government must take on the "lion's share" of the risk, the private insurance industry can and should take on some of that risk, said Joe Wayland, Vice President and General Counsel, Chubb Group.
A multilayered approach is needed to create "a scaffolding" on which the private insurance industry can build, says Robert Gordon, senior vice president, policy, research and international, at the American Property Casualty Insurance Association.
Such an approach would include an affordable base layer of coverage fully funded by the federal government and a public-private partnership that provides additional coverage to businesses, Gordon said.
Pandemic Risk Insurance Act of 2020, which was introduced by Rep. Maloney in May and modeled on the Terrorist Risk Insurance Act, would provide a framework for insurers to offer business break insurance coverage covering pandemics, creating a reinsurance program with a federal backstop.
"There is broad agreement that we need a program like the one created by PRIA," the rep said. Maloney during the discussion.
"A forward-looking public-private partnership like this, backed by a federal backstop, will help companies keep their employees on pay and cope with the storm of public health emergencies," said Rep. Maloney.
More insurance and risk management news about the coronavirus crisis here.