“Bring solutions, not problems” is one of my favorite Mark Cuban quotes. Previously, I advocated a joint private/federal solution going forward, much like that of federal terrorism insurance. But now I understand there is a solution that will enable insurance companies to pay COVID-19 Claims NOW.
“Bring solutions, not problems”Mark Cuban
Many businesses are closed and are looking to their insurance carriers for Business Income coverage. The problem is that Business Income Insurance requires direct physical damage for those policies to pay. But what if the insurers could pay, and what if they paid willingly? For these reasons, and many more, I am asking you to join me in calling for our federal lawmakers to adopt the COVID-19 Business and Employee Continuity and Recovery Fund (the “Recovery Fund”).
The Recovery Fund would leverage the existing insurance infrastructure and provide rapid liquidity through a business interruption claims adjudication process. This process would provide for a smoother and quicker process for businesses and would help speed relief to business owners and their employees immediately. A joint private/federal solution, rather than solely a federal solution, would benefit everyone and help keep costs low. The timeline expectations for this approach would be a 30-day turnaround for expedited interim compensation, while helping reduce waste and fraud.
The other alternative is to leverage the courts to force the insurance industry to pay these claims, but what would the outcome be to such an approach? Arguments aside, what if somehow the courts deemed insurers must pay, how long will it take until the money starts flowing? The reality is, by the time the lawsuits playout and the appeals wrap up, the reality is that it could take years, which is not acceptable, and far too late to help anyone.
Please allow me to list just a few those outcomes:
- It will likely be years until anyone would see a settlement;
- It would cause drastic premium increases like we have not seen before;
- Mass insurance company failures would result.
The money which the insurance companies set aside to pay claims, called surplus, would quickly be depleted. The insurance industry’s total surplus is only $812 billion. Business Income claims for those businesses with fewer than 500 employees would result in a payout of nearly $900 billion per month. One month’s payout alone would bankrupt the insurance industry. In a world without insurance banks would stop lending, businesses would stop expanding, and many more would simply go out of business. The economic impact without insurance would be devastating and long-term, and one that we cannot allow to occur.
The Recovery Fund would provide a partnership between private industry and the federal government, and is consistent with what several U.S. Senators, as well as various national trade organizations, are advocating for in a letter to President Trump. Please contact your member of Congress and U.S. Senator and let them know that you oppose the Business Interruption Insurance Coverage Act and instead support the creation of the COVID-19 Recovery Fund.
The CARES Act was a good start, but please join me in calling our federal leaders to take decisive action in implementing the COVID-19 Business and Employee Continuity and Recovery Fund, and quickly implement this vitally important solution that brings quick restoration to our business community, and preserves the integrity of a strong financial system and help the United States continue to be the world economic leader long into the foreseeable future.
The outbreak of COVID-19 has without a doubt disrupted our businesses and community, but we are here for you. We are advocating for a proposal that would enable businesses in need to receive compensation from the federal government, and we would like for you to spread the word so this solution gets implemented.