Washington Post writers Tom Hamburger and Tony Romm reported yesterday that, “A multibillion-dollar standoff between the nation’s leading insurers and the restaurants, hotels, gyms and theaters that purchase their policies has spilled into some of the most powerful corridors of Washington, as both sides clash over who should foot the sky-high costs of the coronavirus outbreak.
“The battle hinges on whether insurance providers should have to pay claims to companies that have shuttered unexpectedly as a result of the deadly pandemic. The dispute has attracted the attention of President Trump, triggered lawsuits in courtrooms nationwide and touched off a massive lobbying blitz on Capitol Hill, where some insurers say the federal government instead should be the one providing financial help to those that need it most.
“The industry’s powerful lobbyists, led by the American Property Casualty Insurance Association (APCIA), say ‘business interruption’ policies never were intended to cover contagions. Even if they had been, the estimated claims just from small businesses during the coronavirus pandemic could total more than $430 billion a month, threatening to create a ‘solvency event‘ for the industry, said David A. Sampson, the group’s chief executive.”
The Post article noted that, “But business executives who have paid their premiums for years say they have been misled — and now face dire financial straits without the aid they believe they were promised. Some have sought federal aid in response: Prominent restaurateurs including Wolfgang Puck, for example, have raised the issue directly with Trump in recent days. The problem has taken on even greater urgency because of growing confusion about who qualifies for federal coronavirus aid, given changing government guidelines — and fast-dwindling funds.
“Even some of the more obscure Washington political players have bulked up for a fight: The International Health, Racquet & Sportsclub Association, which represents 40,000 fitness clubs nationwide, said it took the rare step this month of hiring a slew of new lobbyists, including two new firms, partly to nudge Congress to provide help on the insurance issue.”
Yesterday’s article added that, “Last month, the National Association of Insurance Commissioners appeared to take the side of industry. ‘Business interruption policies were generally not designed or priced to provide coverage against communicable diseases, such as COVID-19 and therefore include exclusions for that risk,’ they said in a statement.
“But J. Robert Hunter, a former insurance commissioner from Texas, took a different view, saying that some policies do not specifically exclude coverage in case of a virus or pandemic. ‘The courts will have to decide,’ added Hunter, who now directs insurance policy at the Consumer Federation of America, predicting mixed results for both sides in the ongoing battle.”
