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Retailers Urge Federal Pandemic Insurance Program

Wednesday, April 22, 2020

The National Retail Federation (NRF) today called on Congress to pass legislation establishing a federal program that would help businesses obtain insurance coverage for pandemics modeled on a program for terrorism insurance established following 9/11.

“When businesses couldn’t obtain coverage for acts of terrorism after 9/11, Congress stepped in,” NRF senior vice president for Government Relations David French said. “It’s time for Washington to do the same for pandemics. Retailers and other businesses across the country have seen unprecedented losses related to COVID-19 that weren’t covered under most current insurance policies, and won’t be covered if there’s a second wave of the virus next winter.

“At this point it’s virtually impossible to obtain pandemic coverage for the future, but a federally-insured pandemic risk insurance program would provide businesses of all sizes the certainty they need and help rebuild confidence.”

Coverage against pandemics could be crucial as retailers seek to renew leases, invest in real estate, order inventory, plan for capital improvements, and hire or re-hire workers in coming months, French said. “A federal program could also provide a mechanism for immediate and predictable economic recovery should the nation face another pandemic – even one of lesser magnitude – in the future,” he said.

The NRF and 16 other business organizations sent a letter to Congress endorsing the Pandemic Risk Insurance Act, which Rep. Carolyn Maloney (D-NY), a senior member of the House Finance Services Committee, plans to introduce soon. A similar bill is planned by Housing, Community Development and Insurance Subcommittee chairman William Lacy Clay (D-M0).

Backed by committee chairwoman Maxine Waters (D-CA), and developed with input from the NRF, the legislation is modeled on the Terrorism Risk Insurance Act passed after the attacks of Sept. 11, 2001, which made it difficult for businesses to obtain insurance coverage against acts of terrorism.

The new measure would require that insurance companies offer policies that cover pandemics, but would create a federal backstop program that would reimburse insurers when claims related to a pandemic or epidemic exceed $250 billion nationwide. Covered businesses would have to demonstrate that they had suffered significant business interruption with a sharp decline in revenue.

Coverage would also be required for large gatherings, ranging from sporting events to concerts to conventions, that are canceled. The program would cover only future pandemics, not claims from the current pandemic, and would be capped at $500 billion.

“Congress must take swift action and begin contemplating a solution to provide all businesses protection against future pandemic risk,” the letter said. “This approach would serve as a cornerstone to a proactive and prospective approach to managing the risk of a widespread and catastrophic pandemic or epidemic in the future.”

About NRF

The National Retail Federation, the world’s largest retail trade association, passionately advocates for the people, brands, policies, and ideas that help retail thrive. From its headquarters in Washington, D.C., the NRF empowers the industry that powers the economy.

“Retail is the nation’s largest private-sector employer, contributing $3.9 trillion to annual GDP and supporting one in four U.S. jobs – 52 million working Americans. For over a century, the NRF has been a voice for every retailer and every retail job, educating, inspiring, and communicating the powerful impact retail has on local communities and global economies.

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