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Pennsylvania bill would force COVID-19 business interruption coverage


Pennsylvania lawmakers have joined Louisiana, New York, Ohio, Massachusetts and New Jersey in introducing a bill that would force insurers to retroactively cover business interruption claims due to COVID-19.

The move comes as insurance groups maintain that any action to mandate coverage for pandemics could threaten the solvency of the property/casualty industry.

Sponsored by a bipartisan group of 37 Pennsylvania legislators, House Bill 2372 would require insurers providing coverage for “loss or damage to property, which includes the loss of use and occupancy and business interruption” to include “coverage for business interruption due to global virus transmission or pandemic.”

The Pennsylvania bill, which was introduced Friday, would apply to policies in force in Pennsylvania on March 6, which is “the date of the Proclamation of Disaster Emergency concerning the coronavirus pandemic.”

Like bills introduced in other states it would apply to businesses with fewer than 100 full-time employees.

Insurers would be required to indemnify policyholders subject to “the broadest or greatest limit and lowest deductible afforded to business interruption coverage under the insurance policy,” the text of the bill states.

Insurers that pay out business interruption claims under the proposed act can apply to the Pennsylvania Insurance Commissioner for reimbursement, the text states.

Similar to the bill proposed in New York and others this would be funded by a “special purpose apportionment” the Insurance Commissioner would be authorized to collect from all property/casualty insurers doing business in the state.

The bill has been referred to the Pennsylvania House of Representatives Insurance Committee.

Insurance groups continue to maintain that many commercial insurance policies, including those that have business interruption coverage, do not provide coverage for communicable diseases or viruses such as COVID-19.

“Any action to fundamentally alter business interruption provisions specifically, or property insurance generally, to retroactively mandate insurance coverage for viruses by voiding these exclusions, would immediately subject insurers to claim payment liability that threatens solvency,” David Sampson, president of the American Property Casualty Insurance Association said in a statement Monday.

The APCIA now estimates that closure losses just for small businesses with 100 or fewer employees have increased to up to $431 billion per month.

“These numbers dwarf the annual premiums for all commercial property risks in the key insurance lines of $71 billion per year, or about $6 billion a month,” the APCIA said.

However, some analysts believe the concerns that property/casualty insurers will be forced to pick up the tab for business interruption COVID-19 losses are overblown.

Meanwhile, the Pennsylvania legislature on Tuesday also introduced a bill that would issue emergency grants to businesses that have had a business interruption claim denied by insurers.

Businesses that receive grants under House Bill 2386, the COVID-19 Disaster Emergency Business Interruption Grant Act, would be required to remain open and not lay off any employees for the duration of the COVID-19 disaster emergency, it states.

More insurance and risk management news on the coronavirus crisis here