In a letter to President
The Senators in the letter stated their appreciation for the President in his efforts to help struggling small businesses and their employees during this difficult time with the Paycheck Protection Program (PPP), a new small business lending facility at the
The letter reads, in part, "We stand ready and willing to work with you and our Congressional colleagues to ensure that
The letter can be read in its entirety here (https://www.scott.senate.gov/imo/media/doc/20.04.10%20Sen.%20Tim%20Scott%20Letter%20on%20BI%20Insurance.pdf) or below. Also, a list of COVID-19 resources can be found here (https://www.scott.senate.gov/coronavirus).
Dear Mr. President:
We write to thank you for your outstanding leadership of the country during these extremely challenging times and to provide our thoughts on several ongoing economic difficulties being experienced by many of our nation's small businesses.
These are unprecedented times for our country as we continue to grapple with the public health crisis presented by COVID-19. We applaud the decisive actions you have taken to mitigate and reduce the negative health impacts of the virus. We also thank you for your leadership to lessen the economic blow of these essential health policies and for the partnership with
One of the areas of economic focus has rightly been on providing significant aid to negatively impacted small businesses who are suffering because of social distancing and forced closures. Restaurants, shopping malls, movie theatres and thousands of other small businesses have been required to temporarily close or reduce service. To provide these struggling small businesses and their employees relief during this difficult time, the CARES Act created the Paycheck Protection Program (PPP) a new small business lending facility at the
First, insurance contracts are a foundational pillar of our economy and attempting to ex-post facto rewrite them through knee-jerk administrative action would undoubtedly undermine our insurance system and create major unintended consequences for new contractual relationships going forward. Second, if any attempts to legislatively or administratively rewrite insurance policies in this manner are successful, the action could be litigated in the courts for years, guaranteeing that no money would make it to small businesses that need it.
Because BI insurance typically does not cover pandemics absent an explicit rider, insureds under these policies were never charged premiums for that risk and insurers did not reserve for or hold capital against the potential future loss. It is our understanding that most policies - especially those written in the aftermath of the 2002 and 2004 Severe Acute Respiratory Syndrome (SARS) epidemic - explicitly bar coverage for losses arising from communicable disease. 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. Adding another point of stress during these times, this would likely put our businesses in an even worse position - draining the
"Insurance works well and remains affordable when a relatively small number of claims are spread across a broader group, and therefore it is not typically well suited for a global pandemic where virtually every policyholder suffers significant losses at the same time for an extended period. While the
We stand ready and willing to work with you and our Congressional colleagues to ensure that
Finally, there have been several proposals floated by Members of
Thank you again, Mr. President, for your and your administration's steadfast work to protect the health and security of all Americans and our economy. We stand ready and willing to continue to work with you to address these critical issues facing our country today and tomorrow.