Transcripts For CSPAN2 House Hearing On Insurance Coverage During COVID-19 20240711

Recognized by the chair. Members are also reminded that they are responsible for muting and on muting themselves and to commute to themselves after they finished speaking. Consistent with the regulations accompanying House Resolution 965 will only mute members and witnesses as appropriate. When not recognized for inadvertent background noise. Members are reminded that our house rules relating to the order and the decorum of the hearing. This hearing is entitled insuring against a pandemic challenges and solutions for policies and i now recognize myself for three minutes to begin with an opening statement. According to the Congressional Research service, 110 Million People could enter a state of extreme poverty do that 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. And with them, the vendors, the 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. 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 because this Current System is right and because it is my firm belief they shouldnt need a battalion of lawyers after faithfully paying and 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. 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 pandemic. 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. 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 pdemic hit in march the Economic Forecasters are warning Small Businesses many of which havent recovered from th disruption they have experienced alread this year may permanently close the policymakers act. Congress has an Important Role to play but with the election of president elect joe biden im hopeful the government will reond to this pandemic effective leadership which has been and ctinues to be absent. Im thankfu for the witnesses we have an yield back thank you mr. Chairman. I would now recognize the rankingember of the full committee the gentlem from North Carolina for two minutes. Thank you chaman clay for your leadership. Yo have been a strong advocate for youronvictions during your time in ngress and i want to commend you for also your bipartisan work i appreciate the mmittee holding this hearing. Its been delayed because of the nature ofhe selection year and whats happenedhey put a marker down while i have concerns about t construct of her legislation. There are some unworkable parts of the isss laid out and some unrelved parts but we have come to a bipartisan agreement that have impacts on the busiss. We need to look at the solutns and incentivize the participation. And sutions that are scalable and theyve saved mlions of Small Businesses. Thank you for holding this important hearing. After the terrorist attacks of 9 11, the economy completely shut down. We couldnt build anything because Insurance Companies against terrorist attacks so we came together in a bipartisan way and past and it unlocked the market and got the economy moving again and put people back to work and that is what we are trying to do with the pandemic. 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 pandemic related. Currently, Business Interruption insurance policies explicitly 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 government. And during the next crisis, so why not to be proactive and develop a longterm solution. This is a starting point for a forwardlooking Risk Sharing Partnership that would provide a federal backstop that include coverage for pandemics. It 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. Its totally voluntary. This is supported by more than 50 stakeholder organizations. Its the best way to structure such a program and im willing to collaborate with any of my colleagues in the democratic republic who approve of the bell and movbilland move to do just. Today we welcome the testimony of the distinguished witnesses. The owner of the bloomberg general store on behalf of the National Retail federation. We also have john doyle president and ceo. Brian coleman, the chief counsel on behalf of ap cia. Michelle, chief underwriting officer and an International Center the witnesses are reminded that your testimony will be limited to five minutes and you should be able to see a time that will indicate how much time is left. I would ask you to be mindful if you hear the time so we can be respectful of both the witnesses and the Committee Members time. Your written statement will be made part of the record you are now recognized for five minutes to give an oral presentation of your testimony it is an honor to appear to discuss the pandemic risk from a policyholders perspective. I would like to give a special out out and thanks to the congresswomen whove been a champion for the wom owned businesses. Women owned and operated since the get go and the house buness committee the fact that this hearing is being held shows members of congrs care about people on main street. The National Federation has partnered with congresswoman caron maloney to sponsor and we would like to thank you for the leadership on the issu we look forward to bringing muchneeded protection across the country to tse that have been suffering during this crisis. Retail ses and jobs have been demonstrated by this and its not only a Health Crisis but a dire enomic crisis. It is an honor to appear today on behalf of. When my team and i discusd closing friday march 13h i immediately called my Insurance Company live near never steere me wrong they either follow my shop on instagram. And then moving to a new lotion seven years ago. I quadrupled my business. Hes always been extremely forward help me with my business. Was 12 months business income if i needed to shut down and also special Flood Insurance which cost 6182 annually for i also cay workers comp. With his harsh realities i quicklyearned from the insurance policies like mine now wasnt considered not Property Damage. Nodenying policyholders coverage when they needed at the most what happened to like a Good Neighbor or you are in good hands . Then i slowly realized what was happening even if i put on social media to reach out there was no relief in sight and then to how toeep on the financial obligations and firing out our next mov the experience with the darkest of my life. Navigating the uncertainty of the business compounded by the traumatic experience hoping to get a ppp loan. We did receive a50000 loan thanks to congress in support of the c. A. R. E. S. Act which help us to keep afat were closed over three minutes missg easter mothers day share we made 166,000 understand only covers future pandemics but we never know when the next pandemic will come we didntee this one coming in the meantime marriage members of congress to look at those businesses that were forcedo close during government mandates. Also the National Retail federation notnly for widespread availability but Insurance Coverage gossip or paemic coverage. And those that were hard hit by covid19 e pandemic insurance i have a federal prram to help administer Insurance Coverage model on the program that was established in 9 1 its time for washington to dohe same for a pandemic. Not every pandemic has a worldwidimpact but when it occurs legislation of that approach of managing that is time for real soluons for real problem prepared for any questions you may have. You are recognized for five minutes you may proceed. Nd my name is john doyle i am ceo of marsh the Worlds Largest Insurance Broker i appreciate the opportunity to spea to to ensure pandemic risk first and foremost we are deeply conrned of the impact on the econo to be an advocate for clients which i why im here with you all today. The publicrivate partnership is the best for a solution and to recognize the leading role the congressmans had in the debate including introduce the legislation and compelling reasons act now. Moving for Capital Markets will seek assurae that companies have protection againsperspective pandemic risk. The pace of covery depends upon the nature and the degree of confidence in the marketplace. Tang action now has financial protection against future pandemics to absorb some of the initiafinancial shock. If we start now we wilbend the risk her for future pandemics. T 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 are too high to defer action as he thought about a workable solution the following principles have guided us first look at Risk Mitigation how is that designed to encourage resilience to the community . For example should we incentivize prohibitive measures will be linked to ongoing government commitments next is the funding model a Publicprivate Partnership with increased private partnership at the appropriate level of industry commitment. And with the scope of coverage is that compulsory or should also be compulsory for purchase . Next is to chew on distribution to contemplate that what w required, ing forward basis and the technology needed. Finally the claim process a solution of a welldefined trigger of relevant thresholds and specified how and when they deserve to be paid. With financial social benefits to mitigate economic losses while also pviding greater certainty about sustained recovery. Sohich you may be asking it is complex the last several months have said those commercial Insurance Market does not fully provide businesses and others with what they need against the enormous cost of a pandemic it is rarely purchased that makes policyholders reluctant to ensure against ibut at the same time explicitly include pandemic risk the main reaso is sporadic and f that capacity to bear now they look toxisting policies with the loss from covid19 even without specific pandemic insurance in place they will pay out tens of billions o dollars of covid19 related losses nevertheless some policyholders will be disappointed the complex nature means we need Strong National Risk Management to require insurers back to the federal government to a pandemic insurance policies and to contribute the risk owledge and infrastructure. Widespread pandemic coverage the Publicprivate Partnership will help to facilitate coverage and then incentiviz the preparedness and mitigation. And insurae product in the process associated with paemics. With those greater economic inceives thank you look forward to your questions. Thank you and know at this time. Good morning chairman clay Ranking Member clay bird and subCommittee Members. My name is Michelle Mclaughlin and the chief underwriting officer for the Small Business commercial middlemarket at chat one of the largest insurers of small, medium, Large Businesses around the world thank you for inviting me to speak regarding pandemic risk that has risk sharing by the Insurance Industry my world gives me a unique insight into the economic effects of pandemics. And i appreciate the opportunity and is covid19 has shown but also devastating with their impact on the economy and peoples livelihoods. We believe the Insurance Industry is an Important Role to play alongside the federal government to provide assistance to blunt the Economic Impact of future pandemics. Those that are not insurable in the private Insurance Market with other catastrophes like wildfires and hurricanes listed to a specific geography or time. They can affect entire colonies in almost every business. The private Insurance Market cannot underwrite the us economy but the Insurance Industry should have a meaningful role to provide coverage as part of a Publicprivate Partnership with a greater understanding of pandemic risk better preparedness and to create a framework to help congress think about ways to do that the proposal has two components around five Key Attributes a program that has a meaningful role for the Insurance Industry to share pandemic risk with the government and that is recognizes the immediate need of Small Business to provide affordability and choice for Small Businesses with strong incentives with the Insurance Industry and responsible. The first component addresses the need of Small Businesses in the second focuses on middle and Large Businesses. We have bifurcated the program because small and Large Businesses differently. They require a different approach the details are included wherein 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. Industry share of the risk increases from 15 billion in the first of the program to 30 billion over 20 years. To address concerned that some insurers may not have the Financial Capacity to assume risk each individual insurers retention is based on the market share. The 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. 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 have 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 billion years 11 in your ten of the Program Proposal is one of several that have been suggested in recent months the framework might not answer the questions to address the unique needs of small and Large Businesses it is critical to any program we appreciate it would her to work in working with you on this critical issue thank yo you. Thank you mrs. Mclaughlin you are now recognized for five minutes you may proceed. Ranking member stivers and members of the subcommittee im senior fellow and the law of economics i concur with the other witness pandemic risk is at the industry cannot solve on its own and of insurance is a bus structure insurance can see it on the dangs of moral hazard insurance i will be clear i dont have those concerns about the proposalefore you todayf it were to backstop for liability tts where we do need price signals to signal the businesses to invest in litigation to prott employees and customers theres nothing the business can do to avoid a pandemic that could brolled to the federal government to suppt this disruption about one third of businesses have Business Interruption to remove virus exclusions with property insurance policy and and claims disputes any for Business Interruption needs to show damagto the property. The legal theory in covid claims certain contamination is damage most ha nothing to do this is avoid transmission between people that not covered by property insurance. And required to be a shut down and plummeted in places where there were no shutdowns and it was long after because consumers do not want to be infected the best argument is that insurers can help to mitigate the risk but its important is not the risk that it is unsafe thats on the liability side of the risk is that the business will shut down during a pandemic we want the business to shut down and have a safety net so they can survive they were schools are close but the bars and shims are open and then to long preach the gospel, i am telling you the riskbased program for restaurants and Community Theaters and churches pay the most. I think that the outcome that you want. How much has that changed . That seems generous it doesnt that now. With a 500 billiondollar program now 150 billiondollar program if it were in place during covid so lets be humble of the current pandemic so if you want participation with a bias toward Small Business and already have Insurance Options available this should be just the Insurance Industry program with those to help market it and not to go to the claims adjuster process some of those will end up in court so that trigger is much better. It also specifies the bank and only use it for rental payroll but lawmakers should understand that is on how Business Interruption works they can make an interruption claim at the same time without a loss of employees. Unless they have their own programs and partially reimbursed them. And then to take your time with ad Hoc Solutions and to get help to the businesses and workers and communities that need it right now. Thank you. Now you are recognized for five minutes. Mr. Perlman. Embers of the subcommittee thank you for the opportity to be here today. And the senior Corporate Counsel shelter a Mutual Company that is headquartered in columbia missouri foued in 1946 primarily to serve the insurae needs of an on missri missouri farmers going into a company that w rights auto the property in businessnd Life Insurance in 21 states and conducts business internationally. Im here on behalf of the american propertyCasualty Insurancessociation national assoation mutual Insurance Companies which together represent more than 90 percent of home, auto d business insurers in the country. Never said earlier shelters that prompt action to serve the needs of policyholders as a Mutual Company and work with policyholders on a casebycase basis with the current financial challenges. Those to designate for a charity shelters know for doing the right thinwill continue to respond to the rapidly olving situation. Will do right the policyholders and employees we will help peace of mind is the committee in Congress Goes about the future pandemic hover it is imperative we understand the core princle. Not every risk is insurab. Insurance regulators across the country understand the pandemicisk this is true befo covid19 it will be true after for a number of reasons including it is impossible to diversify the losses which is fundamental tenet of insurance. Covid19 affects tens of millions of businesses multaneously in the numbers and Data Protection exed the capacity of the insurance indust to provide the protection. Understandg they are the alternative mechanism to otect business from future pandemics. Whatever it looks like it should be focused on real d efficient and effective asstance our industry believes the risk expertise and infrastructure to an end with his protection models meeting wi stakeholders and businesses with the Business Continuity protection plan. The cpp modeled after congress for world war ii it would provide revenue replacement solution for binesses and nonprofits of all types it would set up a program in u. S. Treary for fully subsidized revenue replacement product any siness or nonprofit in the us. America Small Business for a simplepplication for the three months of 80 percent revenue placement distributed to license Insurance Professionals they could then usehese funds for other operating cost during the pandemic. Parametric trigger mechanism would eliminate the friction for a quick automated release established in advance to pu cash in the hands immiately avoiding a long detailed coverage analysis for complex claims adjustment procedures responding directly to stakeholders with thevent cancellation provisions those thateek the additional protection were need more specialized coverage most importantly the be cpp is the current proposal that would be most affordable r america Small Business with the federal backstop it would be far more expensive bause pricing for the product would be federally subsidized to be made more affordable from the other progms this encouraging a high takeup ratehich is essential for preservinghe broader economy during a crisis we are appreciative of the ideas and the proposals brought forward by congressional lders in the Business Community to addrs the pandemic was challenges we are committed to working with you with affordable protection thank you very much. Thank you all the Witnesses Today with her testimony i recognize myself for five minutes. According to the National Association of Insurance Commissioners with that of 94000 interruption claims made during the pandemic were less than 1 percent of these claims had been paid out so all the operated business in this country it does not mean a battalion to understand and make claims of the policy and miss most Business Owners are not experts with that language and its frustrating to understand especially when youre trying to pay her staff, and deal with payroll taxes and other potential liabilities. Can you please share for us were kind of tall has the pandemic had on businesses like your own especially those that believe they have policies . Many of my colleagues quite honestly have close their bunesses not able to survive in this is devastating iso many ways one colleue had 34 people working for her another was in business 18 yrs. It has bn stressful trying to figure out what our next move would be. After the terrorist attack september 11, not supporting Major Construction without first getting approval that the project had terrorism insurance. At the time is virtually unavailable or extremely unaffordable. Congress responded by passing in 2002 today we are considering the pandemic risk adherence act which is based largely on the same program put the scale of the pandemic is even bigger. Are pandemics and terrorism events comparable enough to use a model for affordable coverage for pandemics also . Thank you for your question mr. Chairman. Thank you, chair man. I do believe that you would indeed exacerbate the problems of ththe criticisms are warrantt basing this on a similar model wouldxacerbate that because of the sustainability t spread the risk are there other ways to strengthen and do you have any thoughts on that . I think the risk as i said is a very different risk that i dont think can be based on this purpose. I think that the product would be unaffordable, tomac. Thank you. I now recognize the distinguished Ranking Member for five minutes going totep back and look at the scope and scale because i think there are some big differences here. Its hard to make the model work for the pandemic. My first qstion [inaudible] for two months and many analyst have said i is a two month shot down because of the next pandemic. Thank you, congressman in your opening remarks as did the chair man, we applaud the congresswoman for putting a proposal on the table. Theres no questions as some of my participants justified before you today the economic consequences are quite differe different. Depending upon theverall ambitions. For the recordouldnt it be tr that above that limit the Insurance Companies until they are completely broken and barupt because of that you will find almost no Insurance Companies that would be willing to produce the current models that we are talking about today in the legislation and i think that is the key so i appreciate that and our conversation when we talked about and i appreciate you taking this approach. What we can do is cap the liability of each individual Insurance Company so that it adds a small level and they grew it over time is there any way to make this a risk . I think by its very nature i dont think that there could be. There would be the tens of billions of businesses at t sameime. Assuming we cannot mak it d assumable risk and an exact dollar stop loss with that how comforting would that be depending where the stoploss is. I think, congressman, that using an insancebased model you also have to factor in the adjusting process and the cost and the time of the adjusting process and the affordability. It is a parametric approach and not on the pandemic there isnt time or scale for the adjustment process, so it is a parametric approach. I think if we look at it as this current pandemic we have had wildfires in colorado and a tornado in arkansas and hurricanes in louisiana, these are our policyholders that we are thefore that we were paying out and taking care of anto do that [inaudible] im sorry, ranking mber. I had a hard time hearing your question. I was asking if [inaudible] about the event cancellation coverage our proposal was trying to cover main street america sohe proposaloesnt really contemate the cancellations but certainly we can expand it and we see that as needed in the future as well. I will yield back. The time is expired and i now recognized the chairwoman of the Small Business committee, the gentlewoman from new york, ms. Velasquez for five minutes. Thank you, mr. Chairman. It is nice to see you again. Ive been so concerned about the impact and how it is impacting the Small Businesses that back in maine on the Business Interruptions i would like to 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 y. Since the start of the pandemic, insurance organizations have constently maintain that the Business Interruptions are uninsurable which instead your organization has pposed the creation of the business section program. First, can you explain if it is in uninsurable risk and then how theusinessrotection program will work . Su, 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 slterhere you would have millions of claims al at the same timehroughout the entire country. Its just something thawould not be a risk for us and i dont think quite frankly for most companies. But i thk what we have proposed would be a program that would have the trigger where because it is a federal program and it would b subsidized by the federal government there would be premiums that would be id but they would be affordableor Small Businesses, nonprofi 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 thinkhat it would be thank you march [inaudible] one of the fst companies that advocated for the plan [inaudible first how would you despond to what was just sai 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 thawe can ask that question about the future pandemics. Thank you for the very complete and ccise comments. We hea about the flaws in the proposal modeled after the terrorism Risk Insurance program. I voted for the lgterm reauthorization last year since e Critical Role in the Insurance Market, but in this case ther theres no existing me for the iurance that failed as it had before the creation and its obvious to me we cannot try to force something that is uninsurable likehe pandemic risk into a terrorism model. I think that simply wil not work and will lead to lower per dissipation ratesnd costs to the riskbased pricingystem. Can you elaborate on this point a little bit . Absolutely. I think tt, congressman, that is exactly the point that we would make i i thi 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 woulde unfordable. And les let us take up among the insurers themselves and ihink 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 lief program provided a form of insurance for like floods, hurricanes and earquakes. The government is in this case the insured of last resor so to speak. Rather than creing an Insurance Program that has association more hazard would that be justs effective to pride 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 yld back. At this time i want to recognize the chawoman from ohio. What is that you use you indicated you are experiencing the darkest days of your life. Because all thpeople that were in a similar one similar situati and as i review this for individual businees under the endemic with 141 billion and then t arrive at a solution if at all possible that the policy impacts everybody. Im willing toork across the aisle but mr. Antrell i want to ask you about something. We were of thepinion you had coverage at the time you wer 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 thatould not pay out. Your testimony and then r 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 g at to be benicial to work with some sort of disclosure and then to find o what they dont hav 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 wo in my favor like david and goliath. If you didnt have to litigate if it tk six months to get your clai 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. Aolutely. So if i could, so the way its drafted now that exist to the payment and then at some point in the relativelyhort future. And that would not be unusual yoof the insurance contract that depends on the contract between the insurer and the governmentnd that is a t 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 rankinmember and the panel that is here today. By to ask the ceo of marshall was the only cpany that could ensure new york along with lloyds of london during at time. Well 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. Chairma can you hear me . I can i hear anythin yes we can hear you. I can i hear his response several ask to get that in writing. I know my ti is almost up. And that i want to ask ms. Mclaughlin if they offici 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 tourvive a pandemic. Every other sign hat on choi he has a for rent sign on it. We have pe and Financial Stability for the future. And smalbusinesses are wrong on across the country hav closer is forever with the amican 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 gohrough anything without a point of refence 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 ses of the aisle and i yield back. Its good to agree with y and at this time i think i saw the genewoman from ohio apparently shes not there may recognize the geneman from Washington State thank you mr. Chairman i wont take this much time i wont have a question just a couple of quick comments tnk you to the panel thi 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 circumstan we are in i dont think they can be exgerated too oen American Families and businesses are hurting on the unprecedented scale. The fact is what we ha 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 coeagues. We have to figure out a way to t. The second comment i want to make is to exess 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 especial with your leadership on housing issuesand 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 . Have heard anecdotal shatters but 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 butne thing that tree a and following an 11 buthats not the case here we didnt have pandem coverage before covid and we dont havet now. So it was carved out explicitly in manyf these programs so theriggering 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 iwould set up a moral hazard or a political hazard to envision that would be placed on the decisionmaker in the political envonment 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 freemket 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 n file any legal action will have a sustained any Property Damage bute 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 anothe if not. And with those challenges to providthe greater interruption in the pandemic sk do bieve that some type of program may be necessaryo be wely 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. Doe i have heard from brokers around t country with the in some have you made it clear before she would contemplat and on inhe case of korea it was catastrophic even though affectednly certain areas. Was a onetime incident the very next day what doe 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 iurance 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 ableo identify how Government Insurance can py a role in that would accomplish that. Im not that familiar with the child proposal. Does the government play a role or should it . Absolely should not be left with covid19 or pandemic ithould 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 ithe coffin of the absolute worst idea th has ever been brought forth into layout claims for which they did not collect premiums retroactivy. With the tens of thousands of contracts ross this country with contract law that has underpinned the free market economy 240 yearst 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 e nversation. We are using t 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 curring 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 onc 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 insurle the cost would be very very high. That is absolutely correct. And the way to have the product me much more affordable to be boht by Small Businessesn the way people that buy io it b then the more concurrent losses you he 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 seco thing is that the notion that is the future congresses would say to american businesses th you paid into this program but the busine 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 tt insurance the next round because of t enable recognize everybody got the sa payment if they paid in or not so this hearing is a lot of bad ideas that are not actually either ani will your back. To recognize a friend from iowa f five minutes you are recogne. Spirit tha you chairman is so good to see you. Am grateful to be here havinghis hearing on an important topic right now. We all know our cotry 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. Pcisely. And then to do this as you c possibly do. And it is very preture to think that right now we could stay here with that Workable Program agast future pandemics. An what we probably should do is navigator way through the review through a the programs we put in place. And th the future pandemics i apprecte all we have done because we all try our best. Thank you for the hearing now go back to the gtleman from iowa. Are youhere . 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 gornment. 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