California Congressman Mike Thompson has tabled a bill to help some business-income entrepreneurs collect benefits for Covid-19-related losses from their insurance companies. 1 Here is a quote from Representative Thompson's press release explaining his reason for filing this federal law:
So many companies in our district and across our country have been forced to temporarily close their doors to help employees and customers to protect during Coronavirus-related shutdowns. And when these companies have filed claims under previously purchased insurance cancellation insurance, they often find it difficult to get these claims paid out. This leads to confusion and a tough financial hit for companies that are already struggling, Thompson says. "That's why I introduced the Business Breakdowns Act, a bill to help businesses get their claims respected, cut through the legal dispute and support our financial recovery. We need to help those companies that work hard to follow local guidance and keep their doors open for the long term.
A colleague and policyholder advocate from New Orleans, John Houghtaling, was widely quoted about the bill in Claims Journal :
According to Houghtaling, the idea behind BIRP is to eliminate strife over ambiguous coverage language that only serves to enrich the complainant's lawyers and defense attorneys. "We may be against the defense attorneys who will make lots and lots of money on [coverage litigation] but I really think it is interesting that there is no opposition [other] at all this, "he said.
He said he believed the other opposition was" a function of confusion "over what his gr Up sought with the proposal.
Insurers who have clear language in their policy would not be included in the proposed federal reimbursement program. 'If you use the word pandemic and you exclude it, it's obvious. You're out, he said, noting that such insurance companies do not need any help to refuse coverage in these cases. In addition, "if you have no exclusion for viruses or pandemics or anything else, you are not part of the program either."
"These are the ones in the middle, where it can be ambiguous and it will be legal dispute," which the proposal seeks to address.
"What the insurance industry should do is pay the insurance they owe; they should deny the policy they don't owe." Between these extremes, "if there are those they are fighting for, that we can have arguments on both pages [about] what we are proposing is that we solve this problem now, & # 39; he said. The alternative is to spend years in court and billions of dollars on legal fees, he said, suggesting that only the insurance industry attorney ̵1; "sits on the biggest payday they have ever had in civil history "- can take advantage of that alternative.  Not surprisingly, the real estate and non-life industry stands against this bill. So is the National Association of Professional Insurance Agents who had this to say about the legislation:  PIA National opposed similar legislation introduced in the spring, and it opposes this legislation for many of the same reasons. "The bill aims to quickly help companies in need when is not designed to help everyone or even most small businesses. Only about 30 percent of small businesses even have business breakdowns, says PIA's National Vice President for Government Relations Jon Gentile. "As such, only a small percentage of businesses would somehow benefit from this bill, and thousands of entrepreneurs would leave fights."
PIA National is also concerned about the consequences of retroactive mandate for BI coverage through law, even when it is done voluntarily. Such legislation would call into question the reliability of commercial contractual relations and threaten the financial stability of the insurance sector. And the downstream effects of such a law, which could create a precedent for rewriting legislation on all types of contracts, can be unintentionally catastrophic in several economic sectors.
PIA National will urge policy makers to reject all proposals – voluntarily or not – to retroactively rewrite BI regulations and instead focus on assistance that will provide sustainable solutions for the vast majority of small businesses affected.
I have mentioned the possibility of federal legislation as a tool for these landmark insurance disputes and disputes. I have discussed this with a number of colleagues on different sides of the insurance field. In summary, nothing seems to command the bipartisan movement of federal legislation in the short term. In fact, state legislation has shown small bones for movement.
While it is really affordable for John Houghtaling to look for win-win legislation to help resolve disputes, by providing a more favorable policy language for policyholders, the only current option is to go further litigation. Some may suggest that business policyholders who want to push the case should think of this as a time to "advocate."
Thought for the day
A statesman who confines himself to popular legislation – or, for the part, a playwright who confines himself to popular theater venues – is like a blind man's dog walking everywhere the blind man pulls him because they both want to go to the same place
—George Bernard Shaw
1 HR 7412, 116th Congress (2019-2020). (As of 7/13/2020, the text of the bill had not been sent to the Library of Congress).