Business Interruption Legislation
At the onset of the COVID-19 pandemic in March 2020, WSIA began tracking and opposing bills that would require insurers to pay for coverage that was never sold and would have far-reaching, significant negative impacts to all consumers and businesses relying on the insurance market to protect them now and in the future. These bills attempted to change every insurance policy issued for loss of use and occupancy and business interruption so that each policy would effectively be rewritten to include coverage for business interruption during the declared state emergency due to the COVID-19 pandemic and mandate insurance policy interpretation regardless of the clear wording of the policy itself, providing a coverage never intended when the policy was underwritten and priced. Consistent with WSIA policy positions on state and federal COVID-19-related legislative and regulatory advocacy, WSIA submitted testimony in opposition to all proposals filed in a state or Congress. Ultimately, none of the 2020 legislative efforts prevailed. All 2020 legislation and WSIA’s opposition letters are available to review here.
Since the beginning of the 2021 state legislative sessions, some of last year’s bills have been refiled and a few states are filing new bills. Some states are proposing to create their own pandemic risk/COVID-19 relief funds unrelated to insurance, which we believe is appropriate. WSIA is continuing to track retroactive business interruption proposals throughout this legislative session. While we continue to believe that there is little support from the broader legislative stakeholders to advance these bills, we believe it is critical to have the industry’s voice on the record with our concerns describing the potential impact of these proposals. Below is a list of current legislative efforts across the nation.
Visit WSIA’s State COVID-19 Bulletins page for a comprehensive list of state notices and bulletins on accommodations for regulatory requirements and any other guidance relevant to surplus lines brokers or nonadmitted carriers
- Legislation: AB 743
- The bill would provide that with respect to coverage for business interruption due to an order of civil authority, a rebuttable presumption applies that COVID-19 was present on property located within the geographical location covered by the order of civil authority and caused physical loss or damage to that property which was the direct cause of the insured’s business. Effectively, the bill would require insurers to pay claims for business interruption that occurred as a result of COVID-19. WSIA joined with the California Insurance Wholesalers Association (CIWA) to issue a letter of opposition.
- Joint letter of opposition filed April 15, 2021.
- Legislation: SB 4028
- Creates the COVID-19 Small Business Relief Program to provide financial assistance through grants, expense reimbursements or subsidies for businesses interrupted during pandemic. Program would not impact insurance policies. WSIA expects a business interruption related bill to be refiled this session but based on last session’s study by a joint industry/agency group, we do not believe there will be support for a retroactive effort.
- Legislation: HB 3166 and HB 3148
- Provide that an insurance policy that offers business interruption insurance shall be construed to include coverage for loss of use and occupancy of a business and business interruption, including lost income, resulting from a forced closure of businesses during a period of a declared emergency by law or order of a federal or State government or governmental officer or agency. The provision would take effect upon becoming law and is not retroactive. Neither bill is expected to move in 2021.
- Legislation: LD 694
- Prohibits insurers that provide a policy insuring against loss or damage to property from excluding coverage for any loss of occupancy or business interruption directly or indirectly resulting from the COVID-19 pandemic. The bill was heard on March 18 and the committee voted to recommend that the bill not pass.
- Legislation: A 4805
- Requires authorized insurers that issue policies of business interruption in New Jersey to disclose, in a form and manner prescribed by the Commissioner of Banking and Insurance, to any potential purchaser or policyholder seeking renewal whether the policy provides coverage for global virus transmission or pandemic coverage. The original version of the bill did not specify that the statute would only apply to authorized insurers but was amended and effectively exempts nonadmitted insurers from the requirement. The bill passed both houses and is awaiting the governor’s signature.
- Legislation: A 4675
- This bill does not propose mandating retroactive business interruption coverage, rather is would establish a Commission on Pandemic Insurance Coverage to evaluate the feasibility of the inclusion of global virus transmission or pandemic coverage in business interruption insurance. It asks similar questions of the members of the Committee that are under consideration by the U.S. Congress with regard to potential implementation of a public/private partnership to address future pandemic risk within insurance policies. WSIA is working with local stakeholders and other trade associations regarding the development of this bill and will file comments as appropriate.
- Legislation: A 3844
- This is a carry-over bill from 2020. There is no companion bill filed in the New Jersey Senate and we continue to believe that legislative and regulatory leaders will not offer their support. If anything changes, we will work with the New Jersey Surplus Lines Association to quickly engage local representation.
- WSIA letter of opposition filed April 13, 2020.
- Legislation: SB 847/AB 498, AB 1937
- Filed January 6. Legislation similar to bills filed in the 2020 legislative session. WSIA will work closely with the Excess Line Association of New York (ELANY) to oppose this legislation and we believe these bills do not have support from the Department of Financial Services (DFS) or the Governor's office. We believe legislation described below is more likely to proceed.
- Legislation: AB 41
- Filed January 6. Directs the Department of Financial Services to study and report upon the adequacy and affordability of business interruption insurance coverage for pandemics, viruses and other public health emergencies.
- Legislation: SB2028
- Filed January 16. Creates a Coronavirus Business Interruption and Municipal Recovery Program. Program would be funded by issuance of bonds to fund grants.
- Legislation: HB 2730
- Introduced on January 11. Legislation was not filed in Oregon in 2020 so this is a new bill; however, sources suggest this bill does not have support to move forward but WSIA will continue to work with local stakeholders and national trade associations to oppose the legislation.
- Letter of opposition filed February 11, 2021.
- Legislation: SB 42
- Introduced January 21. Legislation similar to SB 42 failed to advance in 2020 and our sources indicate that, similarly, this bill has limited support but will continue to work with local stakeholders and national trade associations to oppose the legislation.
- Legislation: HB 5912, HB 5052 and SB 347
- Introduced January 22. Legislation similar to HB 8079 and HB 8064 filed in the 2020 legislative session. WSIA and other trades and local stakeholders continue to oppose the legislation. At this time, leadership support is unknown.
- Letters of opposition filed February 19, 2021 and March 16, 2021.
- Legislation: SB 249
- Introduced December 17, 2020. This bill does not propose retroactive legislation, rather it requires all policies issued January 1, 2022 and later that provide business interruption coverage to cover losses caused by a pandemic, including civil authority, without regard to direct physical loss to the property. WSIA will work with local stakeholders, but we do not believe this bill will advance beyond its committee.
- Legislation: SB 5351
- Introduced on January 26 and a hearing was held on February 2 where no actions were taken. The bill must be passed out of committee by February 15 to move forward in the session. WSIA currently has no indication that the bill will move through committee but will continue to work with local stakeholders and national trade associations to oppose the legislation.
- Letter of opposition filed February 11, 2021.
- Legislation: HB10
- Filed December 15. Creates an emergency relief fund for business operating at the start of the COVID-19 pandemic that were interrupted by civil authority and provides grants and relief. Insurance policies are not impacted.
Comments from WSIA
- May 19, 2020 – Comments to House of Representatives Committee on Small Business Subcommittee on Innovation and Workforce Development. Outlines WSIA’s concerns with proposals that would implement retroactive insurance coverage and interfere with legal contracts. Comments were submitted to each member in advance of a May 21 virtual forum, “Business Interruption Coverage: Are Policyholders being Left Behind?
- April 17, 2020 - WSIA letter to NAIC
- April 16, 2020 - WSIA letter to NCOIL
Comments and Letters from Members of Congress
- May 1, 2020 - Comments from Democratic House of Representatives leadership on continuing concerns with measures seeking to implement retroactive business interruption coverage.
- April 30, 2020 - Comments from Rep. Wm. Lacy Clay (D-MO) and Rep. Steve Stivers (R-OH) reiterating concerns with legislative actions on Business Interruption coverage that unnecessarily and illegally retroactively interfere with the insurance contract.
- April 17, 2020 - Comments from Rep. Ted Budd (R-NC) and other members of the House outlining concerns with any measures that would retroactively impact valid insurance contracts which interfere with existing contract and constitutional law.
- April 16, 2020 - Comments from Rep. Steve Stivers (R-OH) and nearly the entire minority membership of the House Financial Services Committee to President Trump opposing retroactive measures to interfere with valid insurance contracts support for the state insurance regulatory activity protecting policyholders.
- April 10, 2020 - Letter from the Senate Banking Committee to President Trump in support of maintaining insurance contracts without federal interference. This letter was sent in response to his April 10 press briefing where he spoke on the topic on business interruption coverage in insurance policies and called for fairness under the terms of existing policies. He did not call for retroactive coverage. Where a policy includes BI coverage triggered under the circumstances, we all agree with the President that those claims should be paid.
Responses to Members of Congress from Department of Treasury
- May 8, 2020 - Comments from the Department of the Treasury to Rep. Ted Budd, Rep. Steve Stivers and Sen. Tim Scott, agreeing with their concerns with retroactive Business Interruption coverage proposals and the potential negative impact on the stability of the insurance industry.
Comments and Letters from Regulatory and Legislative Entities
International Association of Insurance Supervisors (IAIS)
- May 7, 2020 - Comments from IAIS cautioning against measures seeking to require insurers to retroactively cover COVID-19 related losses.
National Association of Insurance Commissioners (NAIC)
- May 20, 2020 – Letter from NAIC to members of the House Financial Services Committee on Small Business Subcommittee on Innovation and Workforce Development outlining concerns for solvency of the insurance market if retroactive measurers are implemented in certain insurance contracts.
- March 25, 2020 - Statements from NAIC on Congressional Action Relating to COVID-19.
National Conference of State Insurance Legislators (NCOIL)
- March 25, 2020 - Letter from the NCOIL to Members of Congress, in opposition to retroactive business interruption proposals.
State Attorneys General
- May 18, 2020 – Letter from seven state Attorneys General to President Trump expressing concern with any federal action that may expand insurance company liability beyond the plain terms of the policies. Participating states included Alabama, Alaska, Indiana, Nebraska, Oklahoma, South Carolina and Texas.