Examining the Impact of COVID-19 on the Live Event Entertainment Industry - BCC Statement
December 15, 2020
The Business Continuity Coalition (BCC) represents a broad range of business insurance policyholders—large and small from across the American economy, employing more than 60 million workers. The group was launched earlier this year to provide the policyholder perspective in efforts by policymakers and stakeholders to develop a public/private program to limit future economic damage from pandemics that cause business interruptions.
The BCC policy recommendations outlined below embrace several elements of other pandemic-related proposals providing a parametric NDBI insurance product. In contrast to many of these proposals, however, BCC recommends mandating availability in other lines of insurance, including event cancellation. While mandating availability in these lines, the BCC proposal would give insurers the option of supporting a joint underwriting facility instead of issuing the backstopped NDBI on their own paper. An important backstop support for insurers’ developing workers compensation exposure would also be provided.
In short, the BCC policyholder proposal seeks not only widespread availability and affordability of NDBI coverage but also restoration and expansion of pandemic coverage in other lines, including event cancellation, movie/TV production package insurance, general liability, employment practices liability, and other lines that have been hit hard by COVID-19.
Recommendations for Program Features
program adhere to the following principles:
risk, comply with imposed requirements, and get their businesses up and running expeditiously.
3. Availability: Eligible insurers should be required either to share some portion of the risk in the primary NDBI coverage layer or to support other covered lines of insurance, including event cancellation insurance, as a condition of being permitted to sell any government-supported NDBI coverage. Any pandemic program must properly balance the need to ensure participation with the reality that insurers cannot take on too much uncertain exposure.
4. Affordability: Premiums for the program should not aim to cover full program costs. During an initial economic recovery period, the backstop should be without premium, after which the government should charge at least some premium for the risk it bears, but policymakers should not expect premiums to cover the full cost of the program. Premium levels should be set to result in widespread take-up. Cost recovery should be premised on 50+ years.
“deductibles” or co-shares tied to volume rather than risk exposure.
liquidity facility should be authorized to ensure rapid pay-outs.
for that coverage which would also enjoy the Federal backstop support.
element, given the potentially extreme cumulative risk of pandemic losses.
markets’ alternative risk-transfer mechanism to further reduce or protect taxpayer exposure.