Reinsurance News

US Treasury opposes retroactive BI legislation

12th May 2020 - Author: Matt Sheehan

The US Treasury Department has penned a letter to lawmakers voicing its opposition to legislation that would force insurers to retroactively cover business interruption (BI) claims connected to the COVID-19 pandemic.

In the letter, Treasury Principal Deputy Assistant Secretary Frederick Vaughan criticised bills introduced by several states that aim to make insurers pay for disruption to business operations caused by the lockdown.

“While insurers should pay valid claims, we share your concerns that these proposals fundamentally conflict with the contractual nature of insurance obligations and could introduce stability risks to the industry,” Vaughan stated.

Among the states to push for legal action over BI claims are Pennsylvania, New Jersey, New York, Ohio, Massachusetts, South Carolina, and Louisiana.

But there was been widespread opposition to legislation throughout the re/insurance industry, with many senior figures arguing that it could bankrupt  companies and drive up premiums in other areas.

Vaughan added that the Treasury expects to work with Congress, the states, the National Association of Insurance Commissioners, and other stakeholders to determine how best to move forward in addressing losses attributable to both current and future pandemics.

Some market commentators have argued that a government reinsurance backstop will be necessary to provide adequate pandemic cover for businesses in future, via a model similar to the Terrorism Risk Insurance Act.

Print Friendly, PDF & Email

Recent Reinsurance News

Getting your daily reinsurance news from Reinsurance News is a simple way to receive only the reinsurance industry news that matters, delivered directly to your email inbox.

  • Only email is mandatory, but the more you tell us about yourself the better we can serve you in future!
  • This field is for validation purposes and should be left unchanged.

By submitting the form you are giving your consent to be emailed by us.

Read previous post:
Trisura raises C$60mn to support US fronting growth

International specialty insurance holding company Trisura Group has increased the size of its previously announced bought deal public offering to...