Pandemic Crisis Points to Need for Business Continuity Insurance

As the business shutdown resulting from the COVID-19 pandemic continues to weigh on the economy, Nareit and other business groups in the newly-formed Coalition for Business Continuity are working with public policymakers to find ways to reduce the economic damage from new outbreaks of COVID-19, as well as future pandemics and other national emergencies.

The coalition is advocating for federal support for a business continuity insurance program that, in the event of a government-ordered shutdown, will enable businesses and other employers to keep payrolls and supply chains intact, protecting the jobs of their employees and employees economically farther downstream, and reducing stress on the financial system.

Keeping the overall structure of business intact would enable enterprises to ramp up business activity quickly when government-imposed limitations on operations are lifted, the group believes.

“Pandemics will be a reality in our world,” said Nareit Vice President of Government Relations John Jones,” and protection for business continuity is a necessity.”

The effort to formulate a plan for a federally-backed business continuity insurance program is in its early stages, Jones said. The plan must meet the needs of a broad range of groups: the businesses directly impacted, insurers, lenders and other creditors, and, importantly, taxpayers. The need for such a program, however, is not in doubt.

“As of right now, every sales contract, every partnership, every business agreement of every kind is being evaluated in light of the risks of a pandemic-driven shutdown, or one caused by another national emergency,” said Nareit Senior Vice President of Government Relations Robert Dibblee. “The economic effect of this unprecedented pandemic has permanently changed the business landscape.”

Dibblee pointed out that there are a number of successful models that can provide guidance in structuring a business continuity insurance program. Among them are the Terrorism Risk Insurance Program enacted following the 9/11 attacks; the War Damage Corporation developed during World War II, which insured against damage from both enemy attack and also U.S. military action responding to enemy attack; and the National Flood Insurance Program.

“We’re just beginning this process,” he said, “but the sooner a plan can be developed, the better for our members and their tenants.”

“This is essential for all our industry’s tenants,” Jones emphasized. “All of the restaurants, hardware stores, clothing stores—all of the businesses that are essential to our communities.”

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