Pandemic Insurance Backstop Draws Republican Opposition
Rep. Carolyn Maloney, D-N.Y., authored the Pandemic Risk Insurance Act, which would provide up to $750 billion in federal backing to allow insurers to issue policies that would cover losses from COVID or other pandemics. Insurers have denied coverage for most COVID losses, and has excluded pandemic coverage from all new policies.
The entertainment industry has rallied in support of Maloney’s bill because it would help film and TV productions get pandemic coverage, which can be critical to obtaining financing. Many other trade groups also backed the measure, including retailers, hotels, shopping malls and fast food chains.
But insurance industry associations have balked at the plan, arguing that the broad-based nature of a pandemic makes it essentially uninsurable. At a hearing on Thursday of a House Financial Services subcommittee, several Republican members also contended that the idea is unworkable.
“What we have here is a proposal for another government program that will try to do what the market won’t do on its own without subsidies,” said Rep. Bill Posey, R-Fla. “It just simply won’t work.”
Maloney introduced the bill in May, but has faced delays in getting to a hearing due to the pandemic and the election. In an interview with Variety on Thursday afternoon, she said she remains optimistic that a bipartisan solution can be found.
“I expect if we get to a consensus we’ll be able to pass this bill in the first 100 days of the Biden administration,” she said.
In the entertainment world, film and TV productions have been largely unable to get policies that cover pandemic losses. That has posed one more obstacle in restarting production. Maloney noted that other countries have implemented insurance backstops, and said she worried about production going overseas.
“Hundreds of films have been canceled due to the lack of pandemic insurance,” she said. “I’m afraid these film companies will leave America and go to these other countries where they can get financing because they can get insurance.”
The National Association of Mutual Insurance Companies and the American Property Casualty Insurance Association have floated a competing proposal, under which the federal government could provide three months of revenue replacement in the event of a future pandemic. That idea would function less like an insurance program and more like an automatic Paycheck Protection Program, which provided forgivable loans to small businesses.
“The debate will pick up again next year in the 117th Congress, and our first priority will be ensuring that we stop any proposals that are unworkable for the industry,” he said.
Chubb, one of the nation’s largest insurers, has offered its own plan that would rely on $750 billion in government backing to provide support both to small and large businesses.