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Rep. Emanuel Cleaver, D-Missouri, chair of the House Financial Services Subcommittee on Housing, Community Development and Insurance on Wednesday played down the likelihood of a government backstop for pandemic risk.
“It’s going to be very difficult for me to get my colleagues on the other side to realize there has to be a government backstop for yet again another insurance issue. I don’t want to suggest even mildly that that’s something we are going to be able to work out,” Mr. Cleaver said.
Mr. Cleaver was speaking on the second day of a virtual event, “Addressing the Protection Gap for Pandemic Risk,” held by the Organization for Economic Co-operation and Development, with support from Marsh & McLennan Cos. Inc.
The reality is that most insurers cannot afford the business losses from the pandemic, he said.
“Even if they could, most business owners might not be able to afford it because the premiums would be high. In fact, they may be unaffordably high,” Mr. Cleaver said.
Business interruption insurance usually explicitly excludes pandemics, he said.
“Tragically, I have businesses in my congressional district in Kansas City, Missouri, and around the metro area that thought they were covered for events like shutdowns and so they predictably made claims only to be denied because of a lack of physical damage, which pandemics generally don’t cause,” Mr. Cleaver said.
The biggest issue facing lawmakers is the ability to work together across ideological and political lines, he said. “We have a tough agenda ahead of us, and I am not shrinking from it,” he said.
Earlier on Tuesday Charles Rivkin, chairman and CEO of the Motion Picture Association, said the lack of pandemic insurance threatens the ability of the film, TV and streaming industry to rebound and return to something approaching normal.
“Without it, specifically business interruption and specialty lines of insurance, productions large or small are unable to protect filming from shutting down abruptly or being canceled entirely,” Mr. Rivkin said during the OECD event.
Many film and TV productions were canceled last year, impacting hundreds of thousands of jobs, he said.
A public-private partnership in which the government provides a financial backstop to the insurance industry would support pandemic-related insurance offerings and provide the long-term certainty that the film and TV industry needs to get back on its feet, he said.
Direct and timely financial assistance is also needed to get film and TV productions back up and running, he said.
“This immediate assistance would allow productions to survive now, while long-term insurance industry-based solutions are finalized and implemented,” Mr. Rivkin said.
Several governments across the globe have already taken steps to fortify their local content production economies, in lieu of necessary insurance options, including Canada, the United Kingdom, France, Belgium, Germany, Austria, the Netherlands, Australia and New Zealand, he said.
Businesses and risk management professionals are continuing to struggle to manage the complexities of the COVID-19 pandemic as many existing insurance policies fail to cover its impact, a leading risk manager for a restaurant chain said Thursday.