“As President Trump has said, we are ensuring that we take care of all Americans, including affected industries and small businesses, and that we emerge from this challenge stronger and with a prosperous and growing economy,” White House spokesman Judd Deere said.
The fight quickly escalated after much of the country shut down because of stay-at-home orders.
It took little time for restaurants and other businesses to hit a brick wall when they filed business interruption insurance claims that were rejected. Insurers have argued that many business interruption policies weren’t drafted to cover pandemics — and that such events are uninsurable.
“There is a clear reason pandemics, unlike other catastrophes such as hurricanes or earthquakes, are not covered,” Greenberg said. “Unlike a hurricane or an earthquake, a pandemic is not limited by geography or time. It’s everywhere geographically and for extended periods of time. So the loss potential in practical terms is almost infinite.”
That argument prompted a massive outcry from businesses across the country. Restaurants were among the hardest hit by shutdown orders and have been the most aggressive in leaning on the insurance industry to pay out.
The conflict spurred chefs such as Puck, Keller, Daniel Boulud and Jean-Georges Vongerichten to form an advocacy organization — the Business Interruption Group — to lean on insurers. The group’s general counsel is attorney John Houghtaling, who has vowed to launch legal action nationwide. The chefs took their case to Trump directly and via television, his favorite medium.
“The insurance companies are wrongfully denying business interruption coverage for all of our businesses,” Puck said on Fox’s “Tucker Carlson Tonight” on March 25 in a joint interview with Keller.
A separate set of chefs including Tom Colicchio, Sam Kass and Kwame Onwuachi formed the Independent Restaurant Coalition, which as part of its agenda is also pushing insurers to cover Covid-19.
“This is exactly what we paid for,” said Camilla Marcus, a founding member of the group and the owner of West~Bourne in New York. “Every single one of us thought we would be covered.”
In the early days of the pandemic in the U.S., insurance lobbyists were already beginning to craft plans to get ahead of the issue, well aware that insurers would likely deny scores of claims — and spur a wave of litigation.
To get Washington off the industry’s back, the American Property Casualty Insurance Association and the Reinsurance Association of America assembled a proposal to create a government-backed “recovery” fund that would send money to businesses feeling the impact of Covid-19. They won the support of other trade associations representing industries such as shopping centers and retailers and pitched the plan to Trump.
But on April 10 at a daily White House briefing on the pandemic response, Trump rattled insurers with an unexpected statement that made clear he was plugged into the concerns businesses were raising about not having claims paid.
Insurers, Trump said, “need to pay — if it’s fair.” He said business owners “have been paying a lot of money for a lot of years for the privilege of having [business interruption insurance] and then when they finally need it, the insurance company says we’re not going to give it.”
“We can’t let that happen,” he added.
Trump made the comments just as top Senate Republicans sent a letter to the White House warning that the payouts under discussion — which the insurance industry says could be in the hundreds of billions of dollars at least — would drain the reserves of U.S. insurance companies and endanger claims for other risks like wind, fires and hail. Seven Republicans signed the letter, including Sens. Tim Scott of South Carolina and Mike Crapo of Idaho, the chairman of the Senate Banking Committee.
A growing chorus of GOP lawmakers have since tried to discourage Trump from supporting efforts that would have insurers retroactively cover pandemic claims, warning that it would imperil the industry and be unconstitutional, sparking a giant legal battle.
“I had seen the president’s comments,” said Rep. Steve Stivers of Ohio, who sent a letter to Trump on the issue with 21 other Republicans. “Our letter was not intended as a criticism but more of an effort to help everybody understand that the speed is what matters in any approach that we’re going to do to get help to businesses. A retroactive approach would be extremely slow and uncertain because it would be mired down in litigation and would take months if not years to complete.”
Insurance industry representatives believe they have successfully staved off being forced by the government to make payments. But they say that if restaurants and other businesses are able to keep Trump and other officials talking about the issue, it could influence future trials in which Covid-19 insurance claims are being litigated.
“It’s incredibly unfortunate that these celebrity chefs have become the latest victims of wealthy trial attorneys,” said Jimi Grande, senior vice president of government affairs at the National Association of Mutual Insurance Companies. “It is a fruitless dialogue they’re heading down around business interruption claims.”
But the issue is not going away on Capitol Hill.
Lawmakers are looking at ways to continue to support businesses that were denied coverage. Some, such as Rep. Carolyn Maloney (D-N.Y.), are drafting legislation to ensure that pandemic coverage is available in the future, possibly through a government backstop of the insurance industry.
Rep. Nydia Velázquez “was alarmed to hear small business policyholders who faithfully paid their premiums are having claims denied by insurance companies,” said a spokesperson for the New York Democrat, who led initial efforts to pressure insurers on the claims. “She’s working with the small business and nonprofit communities to develop her own legislation with the goal of ensuring policyholders are not left behind.”