The U.S. Treasury Department issued a letter to members of
Congress on May 8 which argued that proposals to force insurers to retroactively
change business interruption (BI) policies to pay losses arising from the
COVID-19 pandemic threaten the ability of the industry to serve policyholders
and might lead to the insolvency of the industry.
In the letter, Principal Deputy Assistant Secretary for Legislative Affairs Frederick Vaughan writes: “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.” He goes on to say that the Treasury will collaborate with insurer groups, federal lawmakers and states on “addressing losses attributable to the current and potential future pandemics.”