A multibillion-dollar standoff between the nation’s leading insurers and the restaurants, hotels, gyms and theaters that purchase their policies has spilled into some of the most powerful corridors of Washington, as both sides clash over who should foot the sky-high costs of the
The battle hinges on whether insurance providers should have to pay claims to companies that have shuttered unexpectedly as a result of the deadly pandemic. The dispute has attracted the attention of President Trump, triggered lawsuits in courtrooms nationwide and touched off a massive lobbying blitz on Capitol Hill, where some insurers say the federal government instead should be the one providing financial help to those that need it most.
The industry’s powerful lobbyists, led by the American Property Casualty Insurance Association (APCIA), say “business interruption” policies never were intended to cover contagions. Even if they had been, the estimated claims just from small businesses during the coronavirus pandemic could total more than $430 billion a month, threatening to create a “solvency event” for the industry, said David A. Sampson, the group’s chief executive.
But business executives who have paid their premiums for years say they have been misled — and now face dire financial straits without the aid they believe they were promised. Some have sought federal aid in response: Prominent restaurateurs including Wolfgang Puck, for example, have raised the issue directly with Trump in recent days. The problem has taken on even greater urgency because of growing confusion about
who qualifies for federal coronavirus aid, given changing government guidelines — and fast-dwindling funds.
“They’re setting themselves up to not pay it,” said Greg Wells, the chief executive of Atlantic Coast Athletic Clubs and one of the group’s members. The fitness chain closed its facilities to about 70,000 gym-goers in early March. Wells soon after filed a claim with his insurer, only to receive a notice that pandemic-related interruptions won’t be covered.
In Texas, for example, a chain of local theaters including Star Cinema Grill has filed suit against their insurer, Lloyd’s of London. The chain purchased “pandemic event” insurance, but Lloyd’s has refused to pay, saying that it is not obligated to cover losses connected specifically to the covid-19 crisis. A Lloyd’s spokesman declined to comment because of the ongoing litigation.