(The Center Square) – Florida has “flattened the curve” in containing the spread of COVID-19, but it will need congressional help to blunt a wave of business bankruptcies expected to crest in the coming months, state Chief Financial Officer Jimmy Patronis said.
In a letter addressed to Florida’s 27-member congressional delegation, Patronis called on representatives to find a way for small businesses to recover losses related to COVID-19 emergency shutdowns that many business interruption insurance policies don’t cover.
“There are a lot of business owners who purchased business interruption insurance policies thinking they would be used for times like these,” he wrote Thursday.
Most business interruption insurance policies provide coverage for direct physical loss to an insured property by a “covered peril,” such as a storm, fire or flood.
In late April, Florida Insurance Commissioner David Altmaier told a subpanel of Gov. Ron Desantis’ Re-Open Florida Task Force that financial losses attributed to pandemics are not are covered under most business interruption policies.
Unfortunately, Altmaier said, there’s little state insurance regulators can do for businesses only now realizing that covered financial losses stemming from involuntary and emergency shutdowns do not include pandemics.
The commissioner said requiring insurers to pay out claims for pandemic-related losses would disrupt the insurance industry.
Insurers “did not intend for (pandemics) to be covered and did not provide dollars for that,” Altmaier said. “Policymakers around the world grapple with this issue. It is an issue not only in Florida, but nationwide.”
“While I believe we need to offer some type of relief to our small business owners, we shouldn’t retroactively mandate insurers cover policies they never contemplated; it would bring down the entire insurance market which would undermine the American and global economy,” Patronis wrote in his letter to Florida’s congressional delegation.
But, Patronis said, Congress needs to meet with consumer advocates and industry leaders to find a solution.
“Many responsible businesses that care deeply for their employees and their communities have spent a lot of their hard-earned dollars on business interruption insurance policies for years, and Congress should take that into consideration as they craft programs to help businesses during this crisis,” Patronis said.
Eighteen U.S. House members – in a March 18 letter addressed to the American Property Casualty Insurance Association (APCIA), the National Association of Mutual Insurance Companies, the Independent Insurance Agents & Brokers of America and the Council of Insurance Agents & Brokers – called for business interruption insurance policies to cover income losses resulting from COVID-19 shutdowns.
“During times of crisis, we must all work together. We urge you to work with your member companies and brokers to recognize financial loss due to COVID-19 as part of policyholders’ business interruption coverage,“ the bipartisan group of lawmakers wrote.
Insurers said they could not retroactively cover pandemics under existing policies.
“Standard commercial insurance policies offer coverage and protection against a wide range of risks and threats and are vetted and approved by state regulators. Business interruption policies do not, and were not designed to, provide coverage against communicable diseases such as COVID-19,” they wrote.
However, APCIA President and CEO David Sampson told Politico on March 26 insurers are “discussing public policy options with many industry and stakeholder groups," and acknowledged the need for “liquidity solutions” for businesses related to business interruption policies.
Without an accommodation, courts may ultimately decide the matter.
At least two lawsuits, one filed by the Bouchon Bistro in Yountville, Calif., against The Hartford, and another by the Oceana Grill in New Orleans against Lloyd’s of London, argue business interruption “all-risks policies” did not contain any exclusions.