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Retail Urges Federal Pandemic Insurance Program Based on 9/11

A retail trade group is urging federal officials to take stronger action on coronavirus relief aimed at aiding struggling business sectors, including retail.

The National Retail Federation (NRF) on Tuesday 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,” David French, senior vice president for government relations at NRF, 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.”

Right now it’s not possible to secure pandemic coverage for the future, French said, 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 would 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, NRF added.

“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,” French said.

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NRF and 16 other business organizations sent a letter to Congress endorsing the Pandemic Risk Insurance Act, which Rep. Carolyn Maloney, (D-N.Y.), 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-Mo.).

Backed by committee chairwoman Maxine Waters, (D-Calif.), and developed with input from NRF, the legislation is modeled on the Terrorism Risk Insurance Act passed after the attacks of Sept. 11, 2001, 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 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.”

Also on Tuesday, seven organizations representing state and local governments called on Congress to “immediately provide robust, flexible relief” to state, territorial and local governments as part an interim relief package for the COVID-19 pandemic.

The National Governors Association, Council of State Governments, National Conference of State Legislatures, National Association of Counties, National League of Cities, U.S. Conference of Mayors and the International City/County Management Association reaffirmed their unity and their partnership with the federal government to protect households and residents from the ill effects of the pandemic.

While the CARES Act allocated aid to states and local governments, governors and local leaders are in dire need of additional assistance to protect the lives of citizens and re-open the economy, the groups said. The CARES Act did not contain funding to offset the drastic state and local revenue shortfalls they are experiencing, nor did it provide any relief to local governments with populations under 500,000.