Transcripts For CSPAN House Hearing On Insurance Coverage During COVID-19 20240711

To declarer can rise a recess of the subcommittee at any time. Without objection members of the full committee not on the subcommittee are authorized participate in todays hearing. Members are reminded to keep their video function on at all times, even when they are not recognized by the chair. Thatrs are also reminded they are responsible for muting and unmuting themselves and to mute themselves after they are finished speaking. Consistent with the regulations accompanying House Resolution 965, we will only mute members and witnesses as appropriate. When not recognized for to avoid inadvertent background noise. Members are reminded that our house rules relating to the order and the decorum of the desk decorum applied to this remote hearing. This hearing is entitled insuring against a pandemic challenges and solutions for , policyholders and insurers. I now recognize myself for three minutes to begin with an opening statement. According to the Congressional Research service, 110 Million Worldwide could enter a state of extreme poverty due to the Global Economic contraction and here in the United States, 67 Million People filed for Unemployment Insurance since march of this year. The harmful effects of this pandemic are the stability of Small Businesses, like restaurants cannot be overstated. Thereve been literally dozens of restaurants in my home district in st. Louis that have closed, many permanently, as a result of this pandemic. Result of this pandemic. And with them, the and with them, the vendors who sell the goods, the farmers who grow the food, truck drivers, Storage Facilities and entire , supply chains are all affected. Though many businesses have insurance, most of the policies have exclusions for pandemics which are likely to be upheld by the courts. S have exclusions for pandemics which are likely to be upheld by the courts. I would add that for many around this country the probability of failing to enforce a policy is unlikely given the high cost of litigation. On the other hand it isnt realistic or practical to expect the Insurance Industry to shoulder the astronomical cost of a Global Pandemic. The american property and Casualty Insurance association has estimated that paying all claims regardless of exclusions would amount to 1 trillion per month while the legislation by my colleagues like congressman thompson and congresswoman maloney and the input. My bottom line is any solution will need effective buyin from the industry with a conundrum posed by the fact that many of the Business Interruption case is being adjudicated have been dismissed and for businesses to make an expectation that you have some skin in the game particularly if youre going to petition or even accept. The industry could work with the business and consumer groups for a type of umbrella policy of which the businesses pay the Current System is rife with confusion and complexity. It is my firm belief they shouldnt need a battalion of lawyers to handle their Insurance Claim after faithfully paying their insurance premium. I look forward to the testimony of the witnesses as we roll up our sleeves and try to find a viable solution. At this time the chair now recognizes the Ranking Member for an opening statement. Member for an opening statement. Thank you for convening the hearing. Id like to take a moment to thank congresswoman maloney for her efforts to put forth an idea as early as may of this year her work should be applauded as a symbolic first step and id like to take a moment backward and put the hearing in perspective. The problems and solutions we will discuss today are about creating a plan for the next pandemic. For that reason so much more important that we do it right then get it fast. Congresswoman maloney reached out and asked for bipartisan collaboration. I feel very strongly as you do to mr. Chairman and that any product that we put forth must have meaningful support from both parties, and ultimately if we are going to have any impact on the Senate Deliberations we need a big vote so we need a bipartisan agreement. And as the Ranking Member of the subcommittee, i can tell you republicans are committed to working in a bipartisan way but we need to make sure that as we do that, i think again we take a step back and dont start with a preconceived outcome. When we take a step back maybe we will use the insurance model or maybe we will end up with a noninsurance approach like you im sorry, like eight parametric ppp grant. That are shut down during the we must make sure that it solves the problem of the businesses that are shut down during the next pandemic. Some of my colleagues today may focus on the existing framework in place for the Risk Insurance but i want to be clear the scale and scope of the pandemic is orders of magnitude bigger than a terrorist attack and you illustrated that, mr. Chairman. We should spend our time trying to understand the nature of the problem and the issues around those that will be testifying today. Those that will be testifying today. Furthermore, its proven disastrous and any solution we address must look at cancellations and thats something that isnt in the legislation. I would like now to yield time to the Ranking Member but before i do while i am not advocating for any one proposal i would ask unanimous consent to enter into the record they did not have a witness that was allowed for this hearing so i would ask unanimous consent to enter their statement into the record. A. Without objection. I am going to recognize the mr. Mchenry. When the pandemic hit in march the Economic Forecasters are warning Small Businesses many of which havent recovered from the disruption they have experienced already this year may permanently close the may permanently close if policymakers do not act. Congress has an Important Role to play but with the election of president elect joe biden im hopeful the government will respond to this pandemic effective leadership which has been and continues to be absent. So i am looking forward to todays discussion of the paths forward and i think the witnesses we will have here today. I yelled back thank you mr. , chairman. Chair clay i would now recognize the Ranking Member of the full committee the gentleman from North Carolina for two minutes. Thank you chairman clay for your leadership. You have been a strong advocate for your convictions during your time in congress and i want to commend you for also your bipartisan work i appreciate the committee holding this hearing. Its been delayed because of the nature of the sElection Year and whats it has been delayed because of the nature of this Election Year and what has happened this past couple of months. I appreciate the comments of the gentlelady from new york, ms. Maloney. What she has done on this issue is put a marker down to Show Congress should get to work on a for futuresponse pandemics. And while i have concerns about the construct of her legislation, pria. There are some unworkable parts of the issues laid out and some unresolved parts but we have i think we can work through and come to a bipartisan agreement that would have lasting impacts on Small Businesses and folks across the country. Dohink our businesses deserve a bipartisan consensusbased solution that builds on existing successful ideas we have put in place over this last year. I think we need to look at the solutions and incentivize the participation. We need to look at solutions that are scalable. Solutions that use our statebystate, harness the power of our state regulatory environment. And look at existing programs like ppp, that have saved millions of Small Businesses. Thank you mr. Chairman for your leadership and look forward to the testimony today. You, mr. Y thank mccann rate. Now i want to mchenry. Now i want to recognize the general aid from new york, ms. Maloney. You chairwoman waters and subcommittee chair clay for holding this hearing. After the terrorist attacks of 9 11, the economy completely shut down. We couldnt build anything because Insurance Companies would not ensure any property against terrorist attacks. So we came together in a bipartisan way and past and it tria. Passed unlocked the market and got the it successfully economy moving again and put people back to work and that is what we are trying to do with the pandemic. , pandemic Risk Assurance act pandemic Risk Insurance act pria . Tens of thousands of Small Businesses have closed their doors permanently and entire industries and theyve been upended and have no way to protect themselves from future pandemicrelated losses. Currently, Business Interruption insurance policies explicitly exclude pandemics. Exclude pandemics. We cant continue to expose the economy and Small Businesses to this level of risk and expect them to recover. We know the federal we know the federal government will step in during the next crisis, so why not be proactive and develop a longterm solution. Pandemic Risk Insurance act pria is a starting point for a forwardlooking Risk Sharing Partnership that would provide a federal backstop that include coverage for pandemics. Pandemic Risk Insurance act pria would create a totally voluntary program and insurers could provide the policy if they wanted to and policyholders could purchase them if they wanted to. To and policyholders could purchase them if they wanted to. Its totally a broad consensus has emerged that pandemic risk is insurable find appropriate federal backstop. This is supported by more than 50 stakeholder organizations. Its the best way to structure at this point we are debating the best way to structure such a program and im willing to collaborate with any of my colleagues in the democratic and republican parties who approved the bill and move to do just that. I would like to place in the bill the list of 50 organizations and Insurance Companies supporting it. Chair clay without objection. Today we welcome the testimony of the distinguished witnesses. A. M. Cantrell, the owning the owner of general store on behalf of the National Retail federation. We also have john doyle president and ceo marsh and , mcclennan. Brian coleman, the chief counsel on behalf of ap cia. Michelle melindas mclaughlin, chief underwriting officer of chubb north america. Editor andxecutive senior fellow International Center for law and economics. Our witnesses are reminded that your oral testimony will be lidded to five minutes. You should see a timer on your screen that will indicate how much time you have left nhi will go off at the end of your time. I would ask you to be mindful if dutch of the time and quickly wrap up your testimony if you hear the chime so we can be , respectful of both the witnesses and the Committee Members time. Without objection your written , statement will be made part of the record. Ms. Cantrell you are now , recognized for five minutes to give an oral presentation of your testimony. Good morning. It is an honor to appear to before you today to discuss the pandemic risk from a policyholders perspective. I would like to give a special shout out to women and thanks to congresswoman velasquez, who has been a champion for the women owned businesses. I am so happy she chairs the house Small Business committee. The house that this Committee Meeting is being held shows shows members of Congress Care about people on main street. Has partnered with congresswoman Carolyn Maloney to sponsor and we would like to thank you for the leadership on the issue. We look forward to bringing muchneeded protection across the country to those that have been suffering during this crisis. Retail sales and jobs have been demonstrated by this and its not only a Health Crisis but a dire economic crisis. It is an honor to appear today on behalf of. All this changed in march, when my team and i discussed closing friday march 13th i immediately called my Insurance Company live company. He taught me my term in business, measured risk. That is what seven years ago. He called my move to a new location seven years ago. We doubled Square Footage and quadrupled my business. Hes always been extremely helpful and straightforward. I member proudly showing my new place as he explained our comprehensive insurance policy that would cover 12 months of business income if something would happen and if i needed to shut down. I have all risk, special Flood Insurance from the hartford which cost 6182 annually for i also carry workers comp. This is a big expense for a Small Business, what i thought would help me in crisis situations. However harsh reality set in. I quickly learned viruses and pandemics were excluded from insurance policies like mine, even though we were ordered to close by the governor there would be no relief because it was not considered not property Business Interruption because it was damage. Insurance company should not be in the this is of denying policyholders coverage when they needed it the most. What happened to, like a good neighbor, we are there. Then i slowly realized what was happening. Even as i followed up the post on social media saying restaurants to be covered a reached offer guidance there was no relief in sight. I made calls to my leathered and tried desperately to figure out how to cover our financial obligations and pay our team members. I kept trying to figure out our next move. The next few months have been the darkest of my life. Navigating the uncertainty of the business i dedicated years my life to has been set and stressful. Compounded by the traumatic hoping to get a ppp loan. Experience of applying for and hoping to get a ppp loan. We did receive a 50000 loan we did receive a 50000 loan fortunately we did receive a 50000 loan and i would like to thank members of congress who supported the cares act which help keep us afloat. Overall we were close three months, missing easter and mothers day. In 2019 we made 300,000. 166,000 we made half, by understand this proposed solution understand only covers future pandemics but we never know when the next pandemic will come. We didnt see this one coming in the meantime marriage members of in the meantime, i encourage members of congress to look at those businesses that were forced to close during government mandates. Even if it is not the form of business interaction as such. Also the National Retail federation as a member of the Business Continuity coalition. Bcc seeks widespread availability but Insurance Coverage and restoration of pandemic coverage and other lines. Includes movie, tv, employment, and other lines hardhit by covid19s. Pandemic Risk Insurance act pria would help administer Insurance Coverage model on the program that was established in 9 11 congress stepped in its. Its time for washington to do the same for a pandemic. Not every pandemic has a worldwide impact but when it occurs legislation of that approach of managing that is time for Real Solutions for real problems prepared for any questions you may have. You are recognized for five chair clay thank you, ms. Cantrell. Mr. Doyle, your recognized. My name is john doyle. Mclennan, thesh Worlds Largest insurance broker. I appreciate the opportunity to speak to pandemic risk. First and foremost we are deeply concerned of the impact on the economy to be an advocate for clients which is why im here with you all today. At marsh, we believe a Publicprivate Partnership is the best option to pursue for a pandemic risk solution. I want to recognize the leading role congresswoman maloney had in the debate including introducing the legislation and compelling reasons that brought us here today. We feel there are compelling reasons to act now. Publicprivate pendant solution will accelerate and make recovery by reducing uncertainty. Moving forward Capital Markets , will seek assurance that companies have protection against perspective pandemic risk. The pace of recovery depends upon the nature and the degree of confidence in the marketplace. Moving for Capital Markets will seek assurance that companies have protection against perspective pandemic risk. The pace of recovery depends upon the nature and the degree of confidence in the marketplace. Taking action now has financial protection against future pandemics to absorb some of the initial financial shock. If we start now we will bend the risk her for future pandemics. Taking action now has financial protection against future pandemics to absorb some of the initial financial shock. If we start now we will bend the curve for future pandemics. But by definition pandemics are global that they cannot diversify against them as of other catastrophes and the stakes around the policyholders may include businesses for all sectors. These are too high to defer action. As we have thought about a workable solution the following principles have guided us first we Risk Mitigation and resilience. How is that designed to encourage resilience to the community . For example should we incentivize preventative measures . Should it invest in resilience initiatives . To ongoingd government commitments to build release resilience in the system. The ongoing commitment to a Publicprivate Partnership with increased private partnership at the appropriate level of industry commitment. Third, the scope of coverage. Compulsory for insurers to offer or to purchase . Next is to chew on or to purchase . Next is distribution and the operating model. To contemplate that what was required, Going Forward basis and the technology needed. Finally, the claim process. A welldefined trigger of relevant thresholds and specified how and when they deserve to be paid. A program that harnesses the financial and social benefits of insurance to mitigate economic losses while also providing greater certainty about sustained recovery. At the same time, i believe the Insurance Industry has a role to play. You may ask, are pandemics at shareable . Insurable . The answer is complex. Traditional Insurance Solutions and the commercial Insurance Market do not fully provide businesses and others with the protection they need against the enormous cost of a pandemic. Pandemic insurance has existed for a long time but is rarely purchased. Its cost and a low likelihood of an event makes policyholders reluctant to ensure against it. At the same time, policies explicitly include pandemic risk explicitly excluded pandemic risk. The payouts can be so enormous they exceed insurers capacity to bear them. Looking to existing policies with the loss from covid19 even without specific pandemic insurance in place they will pay out tens of billions of dollars of covid19 related losses. Nevertheless some policyholders will be disappointed. The complex nature of pandemic risk means we need Strong National pandemic risk management. This requires insurers backed by the federal government to write pandemic risk policies. And for brokers to contribute the risk knowledge and infrastructure. Widespread pandemic coverage the insurance sector of first line of defense for future outbreaks. A Publicprivate Partnership will help to facilitate coverage and align the needs of insurers and buyers to avoid losses then incentivize the preparedness and mitigation. Over time it can spur new technologies products and processes to mitigate losses associated with pandemics. Risk is veryc different from terrorism, if we create economic incentives for address, insurance can and contribute to pandemic can to be to addressing panama grass. Chair clay thank you. Mcglaughlin, ms. Your recognized for five minutes to give an oral presentation of your testimony. Good, chairman clay, ranking never stivers and subcommittee , members. My name is Michelle Menendez mclaughlin. The chief underwriting officer i for the Small Business am commercial midmarket business at chubb one of the largest , insurers of small, medium, Large Businesses around the world with 16,000 employees and 44 branches. Thank you for inviting me to speaker guarding pandemic risk and our ideas for cutting a Public Private partnership that includes risk sharing by the Insurance Industry. My role gives me a unique insight into the economic effects of pandemics. Especially for Small Business consumers. I appreciate the opportunity and to discuss our perspective with you. Pandemics9 has shown are tragic for peoples lives and devastating with their impact on the economy and peoples livelihoods. We believe the Insurance Industry has an Important Role to play alongside the federal government to provide assistance businesses to blunt the Economic Impact of future pandemics. Lay alongside the federal government to provide assistance to blunt the economic imp some risks can create losses so great that they are not insurable in the private Insurance Market without substantial government support. Pandemics unlike other catastrophes like wildfires and hurricanes are not limited to a specific geography, time, risk class. Instead they can create affect entire economies and almost every business. The private Insurance Market cannot underwrite the shutdown of the u. S. Economy. But the Insurance Industry should have a meaningful role to provide coverage as part of a Publicprivate Partnership. Industry involvement will lead to better understanding of pandemic risk, better preparedness and approved mitigation. We have some ideas to create a framework to help congress think about ways to do that the proposal has two components around five key attributes. We need a program that has a meaningful role for the Insurance Industry to share pandemic risk with the government and that recognizes the immediate need of Small Business to provide affordability and choice for Small Businesses with strong incentives with the Insurance Industry. It should be fiscally responsible. The first component addresses the need of Small Businesses in and the second focuses on middle and Large Businesses. We have bifurcated the program because small and Large Businesses are affected by pandemics differently. They require a different approach. The details are included wherein in my written testimony. Part one is for Small Businesses to provide coverage for up to three months of payroll plus other expenses such as rent and utilities. Claims are based on a predetermined amount paid automatically when the program is triggered. This provides policyholders with certainty they will receive timely Financial Assistance after an event. D industry share of the risk increases from 15 billion in for the first year of the program to 30 billion over 20 , years. That some insurers may not have to address the concernthat some insurers may not have the Financial Capacity to assume each individual insurers retention is based on the market share. So a smaller insurer with less market share would assume less liability under the program. Policyholders only pay for private sector coverage not government provided assistance which keeps premiums affordable. Part two is a federal reinsurance facility for businesses with more than 500 employees. Pan re private Insurance Companies that choose to sell coverage would write pandemic policies at market terms and retain some portion of the risk. The rest would be reinsured for pan re, which would pay adequate rates for coverage. Purchase would be voluntary to ensure between one and three months of coverage with the maximum payout of 50 million per policy. We estimate this exposure would be 400 billion increasing to 30 with private insurers absorbing 15 billion in year one increasing to 30 billion in year 10 of the program. Proposal is one of several that our have been suggested in recent months. The framework might not answer the questions to address the unique needs of small and Large Businesses. A significant role for the industry is critical to any program. We look forward to working with you on this critical issue. Thank you. Chair clay thank you, ms. Mclaughlin. Mr. Lehman, your recognized for five minutes. Clay,nk you, chairman raking never stivers and members of the subcommittee. I am rj lehman, a senior fellow for the International Center for law and economics. I concur with the other witnesses, the problem of pandemic risk is one that the industry cannot solve on its own and i would go ahead to raise the question of whether insurance is the best structure for this problem. Insurance is a system of risk transfer, not a system of economic assistance. The committee has her before on the dangers of moral hazard with insurance. I dont have those concerns about the proposal before you today. I would if the plan were to backstop workers comps or liability. That is where you need price signals to signal the businesses to invest in litigation to protect employees and customers. Business interruption is different story. There is no moral hazard because there is nothing a business can do to avoid a pandemic. So there may be a role for the federal government to support Business Interruption. But understand the limits of that approach. Only one third of businesses have Business Interruption. Less than one third would buy pandemic Business Interruption. Pandemic Risk Insurance act virus what remove exclusions from commercial property insurance. That is not mean it would and claims disputes. Any property claim needs to show show damage to the property. The legal theory in covid claims that surface contamination is physical damage is a bank shot. Most business closures have nothing to do with contaminated surfaces. As have been closed to avoid transmission between people and thats not covered by property insurance. Also, does a pandemic claim require there to be a shut down . Business is before any shutdowns. They plummeted in places where there were no shutdowns. And it stayed depressed long after shutdowns were lifted. Business felt because consumers do not want to be infected and there is no Insurance Claim for that. The best argument for a Public Private partnership is that insurers can help to mitigate the risk. But it is important to ask, mitigate the risk of what . It is not the risk of business is unsafe. That is on the liability safe dockside. The risk is that a business will shut down. But during a pandemic we want businesses to shut down. We want them to have a safety net so they can shut down and survive, and not lobby to lift lock on orders. Because that is how you get the situation where schools are closed and bars and gyms are open. Speaking as someone who has long preached the gospel of riskbased insurance, im telling you that you do not want this to be a riskbased program. A riskbased program would be that tech firms that can work remotely would pay laced but restaurants, Community Theaters and churches pay the most. I think that the outcome that you want. Also consider how much has changed since proposals like political pandemic Risk Insurance act pria and bpp were introduced. I consulted back in april. Being generous it does not look like that now. Pandemic Risk Insurance act pria was a 500 billion program and it is now a 750 billion program and not only is that clearly not enough. But given it a structure is one pot of money, if it were in place during covid, all of it would have been eaten up by covid my new york before he got to the second or third wave so we can draw lessons but lets be humble about how little we know even about the current pandemic. The lessons i draw is you want broad participation with a bias toward Small Business. Large businesses already have a lot of Insurance Options available to them including captives which isaac specht we will discuss more today. This should not be just an Insurance Industry program. Banks and payroll processors to help market and it comes to disturbing benefits. You do not want to go to the claims adjuster process. There are not enough adjusters. The process takes forever. As i mentioned earlier some of those claims will end up in court. The pc ppi dev a parametric trigger is much better. Get the money out the door as quickly as possible. Pc pp also specifies benefits can only be used for items like payroll or rent. You can argue that either way but lawmakers should understand that is not how Business Interruption usually works. A business can make an interruption claim and at the same time lay off employees. Another option is the states create their own programs and have treasury partly reimburse them. In alfs dachshund outside for that is you would not you would not have the bank danger pria poses. Take your time, ad Hoc Solutions might be as good as it gets. Get help to businesses, workers and communities that need it right now. Do not legislate for the next pandemic while we are in the mist of the current one. Thank you. Happy to answer questions. Chair clay thank you so much. Foremanill go to mr. For five minutes. Mr. Coleman, you can unmute. You chairman clay, raking never stivers m evers of the subcommittee, and thank you for the opportunity to be here today. My name is brian kuhlman, the senior Corporate Counsel shelter Insurance Companies a mutual , company that is headquartered in club you, missouri founded in founded in 1946 primarily to , serve the insurance needs of missouri farmers. Our success enabled us to grow into a company that now rights auto, property, business and Life Insurance in 21 states and conducts business internationally. Writes. Im here on behalf of the american propertycasualty apc ia Insurance Association and the National Association of mutual Insurance Companies which together represent more than 90 percent of home, auto and business insurers in the country. As a mutual company, we exist on behalf of our policyholders who expect us to be there when they have a claim. Since march we have provided premium release and liberalized grace periods and work with policyholders on a casebycase basis with the current financial challenges. The Shelter Foundation is offering our 1400 agents h to 1000 designate for a charity in their areas working to respond to local covid19 needs. For doing the right thing will shelters knownfor doing the right thing will continue to respond to the rapidly evolving situation. We will continue to do the right thing by our policyholders, agents and plays. Our job is to provide peace of mind by divulging risk solutions. As Congress Goes about the work had plenty for future pandemics is imperative we understand the it core principle. Not every risk is insurable. The reality is, insurers insurance regulators across the and country understand the pandemic risk is generally uninsurable in the private market. This was true before covid19 it will be true after for a number of reasons including it is impossible to diversify the pandemic risk and spread losses across different groups a , fundamental tenet of insurance. Covid19 affects tens of millions of businesses simultaneously and the numbers exceed the capacity of the of businesses greatly Insurance Industry to provide the protection. Understanding pandemics are uninsurable, and alternative mechanism to protect business from future pandemics. Whatever the mechanism looks like it should be focused on real and efficient and effective assistance to all american businesses and nonprofits. Our industry believes the risk expertise and infrastructure to help with the Pandemic Solutions even if we cannot shoulder the direct burden of pandemic losses. We have studied catastrophic protection models and met with stakeholders and put together a proposal called the Business Continuity protection plan. Modeled loosely after war damages created by congress during world war ii, it would provide revenue replacement solution for businesses and nonprofits of all types it would set up a program in the u. S. Trevor irby treasury to administer a federally subsidized revenue replacement product any business or nonprofit in the us. American Small Businesses could access a simple application for the three months of 80 percent revenue placement distributed to licensed insurance professionals. They could then use these funds for salaries, rent or other operating cost during the pandemic. Parametric trigger mechanism a would eliminate the friction for a quick automated release on the occurrence of conditions established in advance. This process would put cash in the hands of businesses immediately avoiding a long , detailed coverage analysis for complex claims adjustment procedures. Responding directly to stay color feedback, it also contemplates an excess program of a bent cancellation provisions for customers who seek the additional protection or are in need of specialized coverage. Most importantly the be cpp is the current proposal that would be most affordable for america Small Businesses. Even with the federal backstop coverage under other proposals would likely be far more expensive than businesses cant afford. Because pricing would be federally subsidized, the cost would be more affordable thus encouraging a high takeup rate which is essential for , preserving the broader economy during a crisis. We are appreciative of the ideas and the proposals brought forward by congressional leaders the Business Community to and the Business Community to address pandemic risk we are challenges. We are committed to working with you on solutions to provide effective, affordable protection. Chair clay let me thank all of the witnesses for their testimony. We now move to questioning of witnesses. I recognize myself for five minutes. According to the National Association of insurance commissioners, over 184,000 Business Interruption claims made during the pandemic were less than 1 percent of these claims had been paid out so all the point that for the business is in this countries you should not need up a tide of insurance lawyers at your side to understand and make claims on your policy if necessary. Most Business Owners are not on business and russian insurance, exclusions and other of twos language. So it is frustrating to understand especially when , you are trying to pay your staff deal with payroll taxes and protect against other potential liabilities. Ms. Cantrell, this is for you. Can you please share for us the policyholder perspective. What kind of toll has the pandemic had on businesses like your own, especially the many businesses who believe they have policies that protect them . Many of my colleagues quite honestly have closed their businesses, not able to survive. This is devastating in many ways. One colleague had 34 people working for her. Another was in business 18 years. It has been stressful trying to figure out what our next move would be. Chair clay thank you for that response. Coleman, after the terrorist attacks of september 11, 2001, Major Construction without first lenders would not support Major Construction without first guaranteeing that a project had terrorism insurance. At the time it was unavailable or extremely unaffordable. Congress responded by passing in tria in 2002. Today we are the pandemic Risk Insurance act pria , based largely on tria, although the costs to insurers of a terrorism event is immense, the scale of a pandemic event is even bigger. Are pandemics and terrorism events comparable enough that a tria model can be used to provide a model for affordable coverage for pandemics too . Thank you. I do not believe it is an acceptable model. Nature isrisk by its a very different risk than the pandemic risk. The terrorism risk is something that is localized. And the risk itself can be spread out throughout the country. Whereas the claims paid out with localized to regions. A pandemic on the other hand is something that is occurring simultaneously across the country with claims that would have to be paid simultaneously throughout the country. It is just a very different, different risk. Thank you. Chair clay let me followup. Tria largely successful, has faced criticism, for relatively low takeup rates among Small Businesses. In attempting to replicate the tria model for pandemics is replicating we are [indiscernible] [indiscernible] its as well . Thank you, chairman. I do believe you would in fact indeed exacerbate the problems you outlined with tria. We do not necessarily feel all of the criticisms are warranted in tria. But i think basing this on a similar model would exacerbate that. Because of the inability to spread the risk. Chair clay are there other ways model ifthen the tria we are to use it for pandemics . Do you have any thoughts on that . Think the risk is, as i said, a very different risk that i dont think can be based on off of tria for this. I think the product would be unaffordable, too. Chair clay thank you. I now recognize the distinguished Ranking Member for five minutes, mr. Stivers . Unmute. Rep. Stivers mr. Chairman, i appreciate those questions. Im going to step back and look at the scope and scale of tria compared to pandemic Risk Insurance act pria and the risks because there are big differences here. It is hard to make the tria model work from pandemic. My first question is for mr. Doyle. With the current version of tria capping liability at 750 billion, assume for a second we have to shut down the United States economy for two months. And many analysts have said it is about a truly dollars per month. Assume it it is about 1 trillion per month. Assume it is a twomonth shutdown because of the next pandemic. For 750 billion dollars who would be responsible for that and how would that work because that is more than the total reserves of the entire property and casualty industry . Thank you, congressman. As you suggested in your opening remarks, as did the chair, we applied congresswoman loney for putting a proposal on the table. Congresswoman maloney. No question it has led tatians and some of the economic consequences for a pandemic are quite different from a terrorism event. We would need to find a way to scale up on that capacity depending on the overall ambitions. Just for the record wouldnt it be true that above the 750 billion limit Insurance Companies would be on the hook for it until they are completely broken and bankrupt . I think that is right or they would be reluctant to participate presuming it is voluntary participation. Rep. Stivers because of that i think you will find almost no Insurance Companies that would be willing to participate in the current models that we are talking about today in the draft legislation. And i think that is the key so i people do not participate, it will not work. Appreciate that and our conversations when we have talked. And i appreciate you taking this principlesbased approach. I think we need to take a step back, start with the principlesbased approach, and as a big group figure out a way forward on this. It may be an insurance based approach or another approach. Frankly i do like building private capacity but i am troubled by the fact that it is hard to make a government takings and insurable risk. What we can do is, cap the liability of each Insurance Company so it adds so at some small level and to grow it over time it does not bankrupt anybody. But i do not think we can truly make this an insurable risk. Mr. I would like to ask coleman. Do you believe there is any way to make this an insurable risk . I think by its very nature i dont believe it could be. I think the fact that you would tens ofs occurring at millions of businesses at the same time. Rep. Stivers assuming we cannot make it and insurable risk and if every Business Model had an exact dollar stop loss, how comforting would that be to you depending where the stoploss is. And we will talk about what that means to a federal program in a second. Sure i think, congressman, that using an insurancebased model you also have to factor in the adjusting process and the cost and the time of the adjusting process and the affordability. Rep. Stivers lets assume for a second it is a parametric, triggerbased approach. Because on a pandemic there is not time or scale for the adjustment process. So assume for a second, is a triggerbased parametric , approach. What i would be concerned about if we look at this current covid pandemic we have had , wildfires in colorado and a tornado in arkansas and hurricanes in louisiana. These are our policyholders that we are there for. That we were paying out and taking care of and to do that sorry, i do im not have time for that. A deeply important part missing here. Im sorry, Ranking Member. I had a hard time hearing your question. Rep. Stivers i was asking if you have had conversations with your ceo about the event cancellation coverage . About our event cancellation coverage . Our proposal was trying to cover main street america so the proposal we put four does not really contemplate event cancellation. But it is a framework so we can expand that we see that as as we see that as needed in the future as well. Recognize thenow chairwoman of the Small Business committee, the gentlewoman from new york, ms. Velasquez, for five minutes. Thank you, mr. Chairman. This control it is nice to see , you again. Ive been so concerned about the impact of covid19 and how it is , impacting our nation Small Businesses. In may, we held a forum in my committee on Business Interruption. I would like to ask you. Hold on one moment. Ask hold on one moment. Do you think that if we had a program in place like the ones we are discussing here today under the pandemic Risk Insurance act that they would be in a financial position and better prepared to withstand the economic [inaudible] absolutely. It would have been a game changer for me and countless others in the community and around the country absolutely. Thank you. Since the start of the pandemic, insurance organizations have consistently maintained that the Business Interruptions are uninsurable which instead your organization has proposed the creation of the business section program. First, can you explain if it is in uninsurable risk and then how the Business Protection Program will work . Sure, thank you, congresswoman. As ive said previously, that i think that it is an uninsurable risk. Certainly for small and mediumsized insurers such as the shelter where you would have millions of claims all at the same time throughout the entire country. Its just something that would not be a risk for us and i dont think quite frankly for most companies. But i think what we have proposed would be a program that would have the trigger where because it is a federal program and it would be subsidized by the federal government there would be premiums that would be paid but they would be affordable for Small Businesses, nonprofits throughout the country, and it would be delivered through the Agency Network that is currently out there and highly regulated by the states. People would be able to buy and purchase either up to 80 of their lost revenue for up to 90 days, and i think that it would be thank you. March [inaudible] one of the First Companies that advocated for the plan [inaudible] first how would you despond to what was just said and second, can you explain why if the right incentives are created, Insurance Companies wont be able to have that mitigating risk. Thank yo thank you very much for the questions. I recognize its complex and its a unique risk. We talked about the lack of diversification with it but we have many clients just like this who are suffering and are under great distress at the moment and it is hard to tackle at the moment which is why we are here. I fundamentally believe in the social benefits of insurance. We will be able to if we structure the program and the right way invest in the new technologies and better collect and manage the data and build models and new ways of working. Im right now sitting in my office in new york city in midtown manhattan. My experience coming to work today was different than my experience was on march 12, so we need to begin to take those steps to harden the infrastructure and bend the risk curve for the next pandemic. Thank you, mr. Chairman. I will yield back. Thank you so much. And now i recognize the gentleman from florida for five minutes. Thank you very much mr. Chair man an a drinking member for ths hearing today. I appreciate the well intended efforts of the sponsor to help Small Businesses but im afraid essentially what we have here is a proposal for another Government Program that will try to do with the market will do on its own without the subsidies. We are being asked to underwrite a Government Program to ensure business losses and do so at premiums that cannot possibly cover the payouts for such losses. From the social policy point of view, is there any economic justification to subsidize the Insurance Business due to a pandemic but not to do so for interruptions due to a financial crisis especially the one we had in 2008. That would be a difficult distinction to make. I can see in both cases where there was a role provided. Whether theres the nee there io create an Insurance Program and Insurance Companies to spend 750 billion particularly as mentioned earlier, only the minority of businesses that have been in this interruption if you dont have a Business Interruption policy, and you often will not have a Business Interruption policy then you wouldnt possibly benefit from this program. Could it be spent better indirectly aiding the businesses, i think likely. And i especially think lets get to that risk. This pandemic first provides help that we need today and then we can get to the point that we can ask that question about the future pandemics. Thank you for the very complete and concise comments. We hear about the flaws in the proposal modeled after the terrorism Risk Insurance program. I voted for the longterm reauthorization last year since the Critical Role in the Insurance Market, but in this case ther theres no existing mt for the insurance that failed as it had before the creation and its obvious to me we cannot try to force something that is uninsurable like the pandemic risk into a terrorism model. I think that simply will not work and will lead to lower per dissipation rates and costs to the riskbased pricing system. Can you elaborate on this point a little bit . Absolutely. I think that, congressman, that is exactly the point that we would make is i think that trying to either force the coverage o onto the companies or even if you make it voluntary, you would have not a great take up up on the Insurance Companies and then even then it would be unaffordable. And les let us take up among the insurers themselves and i think that it would then become even more expensive with less participation. Thank you. Back to mr. Lehman. We have the various models dealing with risk for example the national Flood Insurance program. Another heavily subsidized program and the entire range of programs under the Disaster Relief program provided a form of insurance for like floods, hurricanes and earthquakes. The government is in this case the insured of last resort so to speak. Rather than creating an Insurance Program that has association more hazard would that be just as effective to provide greater control and i would just appreciate your thoughts on that. A good argument could be made that its more likely public catastrophe than it is like some versions like the stafford act thats at least a way to respond to the public closure like that piece of it where you have a Public Health authority that orders and that is a public responsibility. Reimbursing people to comply. [inaudible] the gentlemans time has expired and because of the large list of members waiting to ask questions, i have to ask you to not ask a question, im sorry. Do you yield back . Certainly. Thank you. At this time we will now go to the gentleman from missouri. You are recognized for five minutes. Thank you, mr. Chairman and for holding this hearing. Its extremely important that we do deal with this issue. I want to focus on i understand the Program Proposals that have been offered which involved some risk for different types of Business Interruption insurance vehicles depending of course on the size of the policyholders. I would like to engage the panel just for a minute on this issue and specifically talk about the private sector before it makes sense to intervene so i would like for the witnesses if you could to discuss the broad tolerance of the Insurance Market under the various adverse situations. If there are any other independent analysts effectively evaluating this question and if so, when can we get that data and if all we have going in the wind right now. Any of the panelists, please. Congressman, i am not aware. I would imagine it certainly is in transition and it will be the debate wise to direct to examine the question of the availability and coverage and other coverages. Business interruption is in the only coverage hit by the pandemic. Workers comp and many liability claims those are the things that need to be looked at as well. We are dealing with an extremely Important Program and without the data. I think some of the other witnesses might be able to speak to that. Congressman this is michelle. Weve been designing our program and have the data for our own company obviously. What we are looking to do is create a program that the insurers can have some skin in the game and with guard rails, so the program is as youve seen from the Small Business standpoint it is to limit the exposure by the insurance carriers market so we have a finite exposure and then charge actuarial sound rates to those carriers only for the insurers portion so that it is affordable for the Small Businesses. Thank you very much. January 202nd i spent a lot [inaudible] federal Insurance Office asking them to work on or work in coordination with the industry and the relevant stakeholders in providing an assessment of the pandemic instruments landscape as well as any efforts on the possible shortcomings. This is an important issue and i think we need to have the data so that everyone that is dealing with it can at least understand its parameters. And right now it is a big deal. If we have to vote on something today we would be voting and ignorance. We have no data. And i just dont think with an issue like this as significant as it is that we would waver into the water regarding the organized system presenting the data. Am i off on this . You can tell me that i am. I think youre absolutely right, congressman. Any other witnesses . What does the silence mean . I think we would support you getting that information. And we are also looking at trying to gather some data so we support getting any data that we can to review that. [inaudible] at this time we will now go to the gentleman from new york for five minutes. Thank you to chair man clay, Ranking Member stivers for holding the hearing today and for the witnesses to being here. I represent the first Congressional District which was one of the areas first and hardest hit by covid19. While islanders are tough and have found ways to adapt to the pandemic but many businesses in my district are facing difficult decisions as we reach the colder months in new york, restaurants, gyms and other Small Businesses are once again facing increased restrictions on how and when they can operate. Congress did a great job coming together not as republicans or democrats, but as americans when we pass to the cares act which enacted the paycheck Protection Program to provide needed liquidity for our Small Businesses. Its vital that Congress Comes together again and passes another round of funding to help the businesses whether any government places restriction. Its also important that we start thinking about ways to have liquidity measures in place to assist Small Businesses with any potential future pandemics. Im grateful the representative and fellow new yorker with whom i worked to reauthorize started an important conversation about how to be more proactive for the future pandemics. However, i want to dig a little bit deeper into whether an insurance product makes the most sense or if there are other potential solutions that would provide liquidity to the Small Businesses. One thing we learned from the crisis is the importance of getting cash quickly to the Small Businesses that are forced to shut down through no fault of their own. Can you talk a little about the difficulties of using a Business Interruption insurance product and the claims process during a pandemic . Absolutely, thank you, congressman. Yes, using a claimsbased process would, you would have to have specialized claims and its almost a form of Forensic Accounting to evaluate and doing that is still going to be not as timely as it is needed in a situation like the pandemic and its also expensive which will add to the premiums. Is there a more efficient way to provide liquidity quickly to businesses that if not Business Interruption insurance . We feel that it would do away with the funds into the hands of the policymakers in that regard. This is Melinda Mclaughlin Business Interruption is a product that could be damage to the property although there are others out there like production insurance or event cancellation insurance that are critical for financing film production, sporting events and other live events. What is the rule for the federal government to play to help these markets regain the Insurance Coverage . Thank you, congressman. The proposal that we have put forth is to address the main street america, but certainly we think weve created a framework. Weve got all of the elements combined together to include future types of coverage like weve mentioned here today. After 9 11 construction halted in new york city because lenders didnt want to extend credit without protecting the underlying collateral from the terrorist attack, congress correctly responded to make sure that the lending and financing would be strong. Many of the nations leaders have stepped up and provided for parents to help those that do not have the cash flow to meet the scheduled debt payments, but this is unsustainable in the long term and the proactive solution would be preferable. Whether or not the insurance product is the best method, do you foresee the Market Forces leading to a necessity in creating the Proactive Solutions to provide liquidity to Small Businesses during the pandemic so that these loans are safer and sounder . It is possible. In the case of terrorism, the Insurance Markets coverage that had previously existed and the introduced exclusions that were not there before. No business or very few businesses. I dont imagine that they are going to ask for Insurance Products that do not exist and they are not going to foreclose. I will yield back. At this time i want to recognize the chairwoman from ohio. What is that you use you indicated you are experiencing the darkest days of your life. Because all the people that were in a similar one similar situation and as i review this for individual businesses under the endemic with 141 billion and then to arrive at a solution if at all possible that the policy impacts everybody. Im willing to work across the aisle but mr. Cantrell i want to ask you about something. We were of the opinion you had coverage at the time you were experiencing this . Thank you very much for your question i was paying into insurance i thought i was covered for all situations but i certainly thought it was covered in bed topic was there were dark times. How we pay employees or payroll protection and insurance as well and many of us spoke how we paid for years to do something that would not pay out. Your testimony and then for disclosure so do you think to make it difficult for you . There with that expectation so for example the assertion that was part of the let down for you. Because disclosure help to. Understand what you are saying whether it is my insurance so he things the pandemic has opened up and i should ask for and would it have helped my would have known to ask for it you could have so much uncertainty. My time is limited. What im trying to get at to be beneficial to work with some sort of disclosure and then to find out what they dont have. That disclosure is beneficial we look into that for you. I think this would be great i dont know how many Business People know what is and what is not covered when the Insurance Company says this will cover you thank you mr. Chairman thank you so much you are now recognized for five minutes. Thank you for convening todays hearing into the Ranking Member and the witnesses for appearing by word echo i find it compelling everybody looks into it. And probably will have constituents the same or similar stories so that was it exists in existence he had to litigate your claim. So if i would take action against my Insurance Company . I dont have the resources to take on Insurance Company. Talking to my Insurance Companies cents that is good faith that will try to work things out with the Insurance Company, then my coverage would cease as well. I really didnt think it would work in my favor like david and goliath. If you didnt have to litigate if it took six months to get your claim pay what is effective your business . It can be very helpful and supportive i cannot speak for others but relief was coming the new settlements for your claim to be paid would have a detrimental effect on your business. 12 months is devastating. And in the quick manner. Absolutely. So if i could, so the way its drafted now that exist to the payment and then at some point in the relatively short future. And that would not be unusual you of the insurance contract that depends on the contract between the insurer and the government and that is a the proposal to settle back from happening. The way its drafted now the claim is paid and then the employees were laid off. Empirically speaking what we care about are these relationships between employer and employee. The whole goal with ppe to tackle the virus so the charges would be with permanent federal Program Designed to affect pandemic related losses . With treasury Public Health is a local manner to determine businesses across different jurisdictions like the Public Health zone that would take quite a bit of work. I have 19 seconds left i yield back my time. Coming to the gentlewoman who is chair of the oversight committee. Thank you so much chairman how much i have enjoyed working with you and how glad i am your returning. Thank you for your decades of work helping so many people so the Ranking Member and the panel that is here today. By to ask the ceo of marshall was the only company that could ensure new york along with lloyds of london during that time. We all recognize pandemic so unique in the affect can be devastating. With broad consensus has emerged with research by your company and proposals that pandemic risk is insurable with the appropriate federal backstop. First thank you to marsh for all the research you provided on this issue and we hope you can make it available to all of us. But i would like to ask you, can you explain why any federal program must include a federal backstop . And talk about being able to ensure pandemic risk a number of panelist have said they believe pandemic risk is not insurable. Your comment . Thank you for your research we look forward to hearing your comments. My connection was poor so i didnt hear a few of the prior questions from the committee but i could hear you clearly. Thank you for your leadership. Pandemics are global by nature. They lack diversification so along with other risks, the economic consequences are too severe the risk bearing capacity for insurers to open it up. Many have come forward weve had very constructive dialogues ms. Mclaughlin has been an important voice many believe the industry has a role to play. I would submit with all due respect, shutting down businesses are putting them in a, is not the ideal future state. Ultimately we want to change the outcome of the next pandemic. Mr. Chairman can you hear me . I can i hear anything. Yes we can hear you. I can i hear his response several ask to get that in writing. I know my time is almost up. And that i want to ask ms. Mclaughlin if they official risk with the federal government at the chubb ceo says he believes the industry does have the wherewithal to take risk here. He is that is a mistake they cannot ensure that at all. And that they supported. Why is risksharing possible and necessary for any federal program . Thank you congresswoman for your leadership on this as well. Job feels its important for industry participation in solution because of the industrys knowledge and experience to help drive better behaviors. We feel it has to have some skin in the game. And with the federal government would lead to a better understanding of pandemic risk and incentivize improved Risk Mitigation and preparedness that provides an opportunity for increased risksharing over time when the secondary markets developed to reduce the government financial burden in the future. Thank you for your work how is the pandemic Risk Insurance to survive a pandemic. Every other sign hat on choice he has a for rent sign on it. We have hope and Financial Stability for the future. And Small Businesses are wrong on across the country have closer is forever with the American Society the association to cancel that annual event and this doesnt cover related losses. So this is just our marker to be improved upon. And then to go through anything without a point of reference to build on. You are very welcome. Thank you for your perspective. I appreciate that at this time we go to the gentle man from tennessee you are recognized for five minutes. Mr. Rose . We will come back are you there . He might be an muted now. He is not there are still some difficulties. We will come back to you and now to the gentleman from wisconsin and we will come back. A you hear me . Yes. I was done muted but it messiah taken. Thank you mr. Chairman and Ranking Member for holding this important hearing. We have been trying to hold this hearing since june so glad we can discuss the important issue today. The pandemic has devastated businesses nationwide, government mandateds shutdown with layoffs and closures and programs like the paycheck Protection Program so made it that businesses across the country including my home state to keep the doors open and employees on the payroll. This is critical because in nearly all instances the financial losses Business Space bar not covered by insurance and as we begin to consider legislation to combat this issue in the future, i believe any legislation must be with a bipartisan consensus so require voluntary participation. What is attached to the hearing today but thank you for recognizing this bill as a starting point and willing to walk across the aisle for solutions those that have both advantages and disadvantages and worthy of other consideration as we have bipartisan consensus i look forward to furthering that today. The federal insurance act to offer a pandemic risk coverage as part of the Business Interruption policy. Setting aside the mechanics and to incredibly high cost of coverage. What would happen if insurers largely declined to participate in the program . I dont believe it does require but they have the option to participate. I dont imagine many traditional but those cost would be pretty large as much of their own capital but if it is exhausted or 750 billion but it is unclear how that would work out. I think largely it will be of interest like captive and Risk Prevention groups who will largely serve individual policyholders and government. Thats what we see. What happens if insurers who did happen to participate made coverage unaffordable for most Small Businesses . We give them the cost to administer it would be pretty expensive so its difficult to know what this word look like will pay pay dining with persontoperson interaction if you are a Small Business but several of what we have discussed today so will you explain why the insurance the that means most businesses will not be affected by that but the other side is not of the Insurance Claims. Most of the lockdowns were lifted in september. And wasnt the shutdown there is no cosmetic for the claim to know this is for people to have that. I think my time is expired. Thank you we learn today that this hearing is an important first at 2 00 oclock but to solve this issue working with colleagues on both sides of the aisle and i yield back. Its good to agree with you and at this time i think i saw the gentlewoman from ohio apparently shes not there may recognize the gentleman from Washington State thank you mr. Chairman i wont take this much time i wont have a question just a couple of quick comments thank you to the panel this is a profoundly interesting and important conversation focused on the approaches to do you experiencing right now the serves as an opportunity to underscore the severity and the circumstance we are in i dont think they can be exaggerated too often American Families and businesses are hurting on the unprecedented scale. The fact is what we have done in the past and the employment extension and then to seek and it is incumbent upon this congress to act and even among the colleagues. We have to figure out a way to act. The second comment i want to make is to express commitment how much i have enjoyed and appreciated serving with you you deserve all the best thank you for the collaboration we have experienced over eight years especially with your leadership on housing issues, and frankly your friendship. I wish you godspeed and i yield back. Thank you so much. That is so kind. We now recognize the gentle man from wisconsin you are recognized. Mr. Chairman they give very much thank you for having todays hearing with a specific questions i will direct them one of the things we havent hit in this discussion is historically the Insurance Markets are regulated at the state level and they are required so that insurance policies are solvent thinking back towards sars we have 50 states and is it your knowledge that all 50 states have allowed exclusions for pandemics in their policies . Yes the viral exclusion with sars is the Standard Organization policy language. The big picture we have 50 state regulators across the country that reached the same conclusion to your knowledge. So what were looking at, is what is the demand for your comparing the two under treo we have 9 11 and covenants coming online demanding terrorism risk coverage in the free market is not providing that congress is called to act to interact date on to direct a real market demand is there a market demand with other market demands driving us forward as it relates to providing pandemic coverage at the National Level . I have heard anecdotal shatters but i have heard of no evidence is a common requirement for banks to require something that doesnt exist and following 9 11 with a catastrophic Loss Congress is called to act as it relates to tree a bit but one thing that tree a and following an 11 but thats not the case here we didnt have pandemic coverage before covid and we dont have it now. So it was carved out explicitly in many of these programs so the triggering event word really shift in many ways from traditional Insurance Coverage and actual occurrence of the event possibly an act of congress and State Government and it seems like it would set up a moral hazard or a political hazard to envision that would be placed on the decisionmaker in the political environment when a tornado comes through town it hurts. This would be a triggering event. Can you comment if there other instances that you can think of where a political actor would control a triggering event and how that plays out with potential moral hazard . The only real comparison is with the treasury secretary has to certify a terrorist event but we cannot or this , through the various proposals, they all consider different stakeholders that can be complicated. And those that are pretty knowledgeable but you dont see other instances from what i consider freemarket private insurance triggered. Usually events are defined. Now going to the gentleman from florida. I can see you now. So my question is and then to be and those that have denied businesses coverage with the covid19 pandemic and by taking the position of covid19 does not constitute a direct physical loss. And like fire damage or every other damage. And with that policy perspective how do you think about that . The litigation part . I mention that because everybody has a preexisting condition there is so much litigation involved. I understand and as i mentioned earlier i did not file any legal action will have a sustained any Property Damage but we were shut down by the governments orders there was nothing i could do i have a website thats how we even could function at all. But the languages and their to civil is to support Small Business. I see others have taken legal action. So now i have another if not. And with those challenges to provide the greater interruption in the pandemic risk do believe that some type of program may be necessary to be widely availabl available. I think the entire panel agrees the private market alone will cover like the Global Pandemic thats what we all agree with. Its true on to correlated a risk to not have just the private solution. But there is a government role. Can you hear me . Apologies on behalf of more than 10000 policyholders to get their claims played on paid is why we are here we need a program that covers Business Risk of Going Forward and structure in a way that encourages participation to subsidize the government with the quick and simple trigger to get liquidity into the system. And create the right incentive over time. With all due respect to the other panelist by putting the business in a, we should set our sights higher than that. And i appreciate that line of questioning. And now going to the gentle man from texas. First i want to say how much of an honor it is during my first term in congress. And also chairman without objection i would like to insert the bipartisan bill the Small Business come back act with a list of supporters and records that legislation will complement the c. A. R. E. S. Act and paycheck Protection Program to reduce insert on restrictions on healthcare and those that are most impacted by covid19 and those underserved areas in the legislation of how to address future pandemics. And then to. [inaudible conversations] [inaudible] and that is part of the hearing record . Thats correct. Without objection. I want to ask your comments maybe it is overlooked by sound but the basic principle but it is the few paid for by that many with the National Pandemic so i would like for you to touch on that but also comment but we have to mandate that insurers offer this coverage and what are the unintended consequences to the market as well so when the economy shuts down the Insurance Industry alone cannot carry the other half on its back. There is never a scenario where that is possible. Thats why correlation is not harmful for the insurance policy on their own because the outside but otherwise then she doesnt have to know. It is automatic. I covered and for that if you add the cost if you think of a Business Interruption you are not necessarily getting the outcome that you want. Thank you. Mr. Doyle i have heard from brokers around the country with them in some have you made it clear before she would contemplate and on in the case of korea it was catastrophic even though affected only certain areas. It was a onetime incident the very next day what do we do . Because of the attacks had happened not even to the rest of it. Should Congress Wait until this is complete before we talk about a longterm solution from the insurance perspective . The market for pandemic was limited before and is limited today. Our clients are taking this risks. As mentioned in my earlier remarks. I think its critical with the economic and as we both talked about but then i thought we have to move soon. Thank you so at this point we now go to the gentleman. Thank you so very much mr. Chairman. I would request i would request i would request but in particular on housing but then that your cousin. And we respect to you. And we respect to you. Thank you medicare. Thank you medicare madam chair. Thank you. Now that they know what the world dedication. [laughter] now i will turn to the question for ms. Mclaughlin . With the trade groups that have argued pandemics cannot be ensured again. To help businesses with the federal government but not everybody agrees. And then spiking that is over 1 trillion each month. So what do you think . I think the federal government should be entirely on the hook the Insurance Industry should play a role as well. And then to have some guardrails and thats what the program has presented a finite exposure for the Insurance Industry and as we learn about this over time we think that exposure and when it will grow. Thank you for your explanation and your concern and to explain the role that each play. Ms. Cantrell. What will those expenses that you might have expected trade policy to cover . First of all rent has been high and they will cost, Health Insurance and in the retail cycle. So you able to identify how Government Insurance can play a role in that would accomplish that. Im not that familiar with the child proposal. Does the government play a role or should it . Absolutely should not be left with covid19 or pandemic . It should be shared yes. Thank you very much mr. Chairman i yield back the balance of my time. And. And appreciative of your service in the committee as a whole also all the bad ideas we are throwing around to put a nail in the coffin of the absolute worst idea that has ever been brought forth into layout claims for which they did not collect premiums retroactively. With the tens of thousands of contracts across this country with contract law that has underpinned the free market economy 240 years it is a violation of those basic principles and every state regulator approved the exclusion of pandemic insurance as a part of Business Interruption insurance. And that has been lost in the conversation. We are using the word insurance a lot but really zooming out that this is truly a risk for the industry can you elaborate why . The fact that this is occurring when that to spread the risk around and to use them any to play the claim of the few in trying to pay for everything at once speak to hear other members with the Publicprivate Partnership what they mean that they would cost and then updates to do some premiums with those contemporary losses that would occur and then to say this would include economic stability and to lower the premiums dramatically not the real underlying risk or by the government. Because the government itself is stable if it was insurable the cost would be very very high. That is absolutely correct. And the way to have the product me much more affordable to be bought by Small Businesses in the way people that buy into it but then the more concurrent losses you have seen need a government Balance Sheet to step in. If it is very good you have a good problem getting paid out but those that what continues to be a concern. The second thing is that the notion that is the future congresses would say to american businesses that you paid into this program but the business next door that is suffering mildly will not be paid out. Ive only been in congress for years but i bore witness to the inclination the future congresses to pay everybody and to help spur the economy and then nobody will buy that insurance the next round because of the enable recognize everybody got the same payment if they paid in or not so this hearing is a lot of bad ideas that are not actually either and i will your back. To recognize a friend from iowa for five minutes you are recognize. Spirit thank you chairman is so good to see you. I am grateful to be here having this hearing on an important topic right now. We all know our country has been incredibly hard by this pandemi pandemic. You are echoing. Try it again. You are still echoing. To mr. Gonzalez from ohio you are recognized for five minutes. Thank you mr. Chairman and to everybody for participating in this hearing a lot of thought because i know they tried to solve and having said that i want to associate myself with mr. Hollingsworth remarks it seems awfully premature and i have heard am curious does anybody believe this is an insurable risk . There are risks that are insurable is not possible for the industry at the macro level to find the entire pandemic. But you can have a policy with the cap but is not not nearly enough. Precisely. And then to do this as you can possibly do. And it is very premature to think that right now we could stay here with that Workable Program against future pandemics. And what we probably should do is navigator way through the review through all the programs we put in place. And with the future pandemics i appreciate all we have done because we all try our best. Thank you for the hearing now go back to the gentleman from iowa. Are you there . She is not there. Mr. Timmons you are recognized for five minutes. Thank you mr. Chairman and for your Great Service and then find ourselves in the midst of a disaster. And then for us to be the voice in this critical decision. I feel the intense pain and those for customers those that are unwilling for the ways we are accustomed to shopping than this is not the Business Owners fall. I have heard today any longterm solution must work for all parts of the economy and help those that are forced and as proposed to address the problems so many Small Business owners are facing. We do believe it is a better model and the insurance model for handling those claims and that ppe could get money in the hands. You agree that would not necessarily help the Small Business owners and that is the affordability of it. And for those that operate on very thin margins. If that was a while last year does anybody on the call want to estimate the cost to the federal government for its portion of these losses . Does anybody have a testament . We are talking trillions. Yes congressman that is why the diversification issue in the private market would have solved for the somebody. This is why we need government. I believe this is a realistic solution. And then as potential terrorist attacks even those that are confined and they have a very clear beginning and and. Let me go on and lets try her one more time. You are recognized for five minutes. How does this sound chairman . Much better, it sounds like you. Thank you so much for putting up with my technical difficulties, i never thought i would be saying that in the middle of a hearing, but here we go. Thank you so much for having me here, this is an incredibly important topic of course for Small Businesses across the country who have been hit so hard with this pandemic. At 40 50 looking of our restaurants closing in the next six months and that is just one example with covid uncontrollably getting worse across this country. The starting point for what we are discussing here today is that businesses in my district and around the country and out in march that even if they were companies thatof had Business Interruption insurance a likely did not cover pandemic. Of thele, known none policies we are discussing today would retroactive and cover covid19 losses is that correct . That is correct. Thank you, i know the estimates for losses were more than 400 billion per month for just the smallest businesses, i am wondering how much do you think we might be talking about ensuring . Do you have an updated estimate for the low estimate of the losses for this year . I do not. Ok, mr. Kuhlman do you . No, i do not. For any of the witnesses if this were just to be covered over all, do you have a sense of what kind of premiums than that we would be talking about relative to current insurance . Congresswoman, what im suggesting is that we develop a program that encourages participation. It we need to in some way be subsidized by the government and u. S. Government, that would make the case that the government is ultimately holding the risk today. From the cares act or are the social benefits of insurance and we can mitigate the future impact of pandemics on our economy if the private market, the government, and our policyholders come together. I appreciate that, but i have to be honest it is hard for me to evaluate proposals to cover future pandemics when no one knows what those a mems might be, that is an important piece of what this looks like. Whatu have any sense of percentage of businesses might want pandemic coverage with or without a federal subsidy and if you are including a federal subsidy, how large you estimate that to be . It is hard to say what the ultimate takeup rate would be, of course it would depend upon how we structured and ultimately price to the program. A government subsidy would be required. No clear understanding right now at this point on the typesf premium and or the of subsidies that would be necessary for that is my understanding. It would depend upon the amount of risk the government would be willing to backstop the private market. This crisis unfortunately has shown us firsthand how many of our businesses cant even go weeks without revenue coming in. There is another issue we have to address here which is how fast we can get relief to the businesses that need it and we certainly found that with the ppp this spring how much a difference even a few weeks can make in getting that into folks hands and i know firsthand the problem with Insurance Claims is not always the quickest process and that is even without anyone making a claim at the same time. How quickly would business be able to get the help they need during a pandemic and i will take an answer from each one or that. Of you on the if we could set the right trigger, we could get that claim within weeks. Within weeks he said . You said . Yes. I think with a parametric trigger it would be immediate, you would not have a traditional claims process where you are having to adjust to some Forensic Accounting on determining the amount. It wouldnder the bcpp be nearly immediate. Thend congresswoman, under program as well we are looking at a parametric structure for Small Businesses that we can get funds in the hands of Small Businesses as quickly as possible. Thank you for that, since these proposals are forwardlooking i want to make sure we have got a solution that actually works for businesses that need it. I want to make sure we dont raise costs for businesses so much the insurance could be unaffordable and push them out of business right now as we are coming out of a pandemic. We also risk fighting the last war and charging businesses something they wont even use. Thank you for your answers to give me clarity and chairman i yield back. Andhank you so much understanding the Ranking Member from ohio wants to make a closing statement. I just wanted a point of personal privilege, mr. Chairman. Please go ahead. I will be very brief, i think this hearing is another example of showing your leadership and what you have done to make congress better, to make america stronger and to serve your constituents, and i for one and very clout proud to have worked with you and i want to say good luck to you in your future and that we will all miss you very deeply. Your hard work, your diligence, and your caring nature, thank you for making our country better and for representing the best of us. Today just another example of that. Great hearing today. Made a difference for america, god bless you and your future, mr. Chairman. Thank our like to testimony today without havetion, all members will five legislative days within which to submit additional betten questions which will given a response. I ask our witnesses to please respond as promptly as you are able. Without objection, our members will have five legislative days with which to submit extraneous material to the chair for inclusion in the record. I remind members to submit written material to the email staff. Provided to your without objection i would like to submit a [indiscernible] and for the record and also a letter to house leadership. Those letters address pandemic insurance. This hearing has certainly raised interesting protectn how to best businesses of all sizes during a Global Pandemic. Thank chairman maloney for bringing me this issue to the forefront and im certain this will not be the last three here this issue more than likely, this will be the last hearing of our chair [indiscernible] thehe house at the end of 116th congress. Let me say, it has been an honor thisrivilege to serve in onlyand a station experienced by some 11,000 americans throughout our nations history. As chair waters mentioned, we to me, to all but of the members of this committee and this congress, i look at you all like we are family and hold you in my heart as such. I wish you all success in the 117th congress and god bless you all. This hearing is adjourned, thank you. With coronavirus cases increasing across the country, use our website cspan. Org coronavirus to follow the trends, track the spread with interactive maps, and watch updates on demand any time at cspan. Org coronavirus. Monday, the Michigan Bureau of elections made to certify the election results, the four member bipartisan board is required by law to certify the results by november 23, so far all of michigans 83 counties have certified their result, but the rnc and estate republican officials have asked of the board to audit results from wayne county and detroit. Watch live coverage of the meeting monday at 1 00 eastern on cspan. Conversation on the history and future of the organization for security and cooperation in europe which has and north 67 europe american states, it was created in the early 1970s to provide security and action of rights. Hosted by the wilson center, this is 90 minutes. Im jane, the president and