Ranking Member Scott Leads Senate Hearing on Potential Frameworks to Address Future Pandemic Risk
WASHINGTON – Today, U.S. Senator Tim Scott (R-S.C.) led his first hearing as Ranking Member of the Securities, Insurance, and Investment Subcommittee of the U.S. Senate Committee on Banking, Housing, and Urban Affairs to receive relevant stakeholder perspectives on potential approaches to manage and mitigate financial losses that may arise from future pandemics.
The COVID-19 pandemic required federal, state, and municipal governments to quickly craft and implement policies to mitigate the spread of the virus and respond to the severe economic losses related to these emergency public health measures. As the United States continues its strong recovery from this event, many legislators, insurers, and policyholder groups are beginning to consider how to best prepare for and manage future pandemic risk.
During the hearing, Ranking Member Scott and Chairman Robert Menendez (D-N.J.) heard from the business community, insurance industry stakeholders, and risk management experts – including Dr. Robert Hartwig, Professor of Insurance and Finance at the University of South Carolina – about the respective merits and challenges associated with a spectrum of pandemic risk insurance proposals and frameworks that have been proposed in Congress or by private sector stakeholders.
Ranking Member Scott and members of the subcommittee welcomed the opportunity the hearing provided to gather expert options from a broad range of perspectives on the potential costs, challenges, and benefits associated with various proposed models to address pandemic risk but emphasized that policymakers should be thorough and deliberative in their information-gathering before considering any possible next steps.
RM Scott on the CARES Act and the Paycheck Protection Program…
“The CARES Act specifically created the Paycheck Protection Program (PPP) to provide struggling small businesses and their employees financial assistance that would allow them to weather the storm and maintain their employer-employee relationship… Congress – on nearly a unanimous basis – chose the PPP as the appropriate approach to quickly getting [federal aid] into the hands of small businesses, rather than attempting to retroactively change business interruption insurance contracts that do not cover pandemics [and] viruses – a choice I support wholeheartedly.”
RM Scott on the challenges of financing pandemic losses…
“If every insurer in the nation has an event where every insurance company has to pay out for every single insured [entity] at the same time, and the event is 100 times more than the insurance premiums coming in from every single insured [entity], it’s kind of hard to insure it.”
Dr. Hartwig on pandemic insurability…
“Typically, when we think about insurance, we have the losses of the few are paid for by the premiums of the many. When we’re talking about pandemics, essentially every business was affected nearly simultaneously. That is completely anathema to what insurance has always been throughout its nearly 2,000 year history. ”