GOP senators urge Trump to protect insurers from state legislation

Seven GOP senators sent a letter to President TrumpDonald John TrumpSessions accepts 'Fox News Sunday' invitation to debate, Tuberville declines Priest among those police cleared from St. John's Church patio for Trump visit Trump criticizes CNN on split-screen audio of Rose Garden address, protesters clashing with police MORE on Friday asking that he commit to protecting the insurance industry from proposals in state legislatures that would require insurance companies to retroactively cover small-business losses due to the coronavirus pandemic.

Many small-business insurance policies do not cover pandemics when it comes to losses from business interruptions.

State lawmakers in New York, New Jersey, Ohio and Massachusetts have introduced bills that would retroactively require small-business insurance policies to cover losses due to closures from the coronavirus.

The letter to Trump, obtained by The Hill, warns that the new state-level legislation would result in enormous financial losses for the business insurance industry. The letter is signed by Sens. Tim ScottTimothy (Tim) Eugene ScottSenate Republicans urge Trump to tone down rhetoric on protests GOP senator says 'it would be helpful' if Trump changed 'the tone of his message' on protests The Hill's Morning Report - Presented by Facebook - Trump tweets as tensions escalate across US MORE (R-S.C.), Mike CrapoMichael (Mike) Dean CrapoOn The Money: US tops 100,000 coronavirus deaths with no end in sight | How lawmaker ties helped shape Fed chairman's COVID-19 response | Tenants fear mass evictions GOP senators urge Trump not to restrict guest worker visas How lawmaker ties helped shape Fed chairman's COVID-19 response MORE (R-Idaho), Thom TillisThomas (Thom) Roland TillisOVERNIGHT ENERGY: Trump administration gives renewables more time to take advantage of tax credits | House Republicans introduce bill to speed mining projects for critical minerals | Watchdog faults EPA communications in contamination of NC river Trump administration gives renewables more time to take advantage of tax credits Tillis campaign releases first general election TV ad emphasizing 'humble' roots MORE (R-N.C.), Mike RoundsMarion (Mike) Michael RoundsGOP senators urge Trump not to restrict guest worker visas Burr decision sends shock waves through Senate Lawmakers move to boost federal cybersecurity in annual defense bill MORE (R-S.C.), Pat ToomeyPatrick (Pat) Joseph ToomeyGOP senators push for quick, partial reopening of economy NSA improperly collected US phone records in October, new documents show Overnight Defense: Pick for South Korean envoy splits with Trump on nuclear threat | McCain blasts move to suspend Korean military exercises | White House defends Trump salute of North Korean general MORE (R-Pa.), Ben SasseBenjamin (Ben) Eric SasseHillicon Valley: Lawmakers demand answers on Chinese COVID hacks | Biden re-ups criticism of Amazon | House Dem bill seeks to limit microtargeting Lawmakers ask for briefings on Chinese targeting of coronavirus research On The Money: GOP senators heed Fed chair's call for more relief | Rollout of new anti-redlining laws spark confusion in banking industry | Nearly half of American households have lost employment income during pandemic MORE (R-Neb.), and David Perdue (R-Ga.).

The GOP senators argued that the proposed changes “undermine our understanding of contractual obligations” and would serve to “help one segment of the economy by seriously harming another.”

They said the insurance companies did not charge premiums associated with pandemic risks and therefore do not have the capital required to cover losses due to the coronavirus closures.

“If the insurance industry were now forced retroactively to cover perils that were never accounted for commercial insurers could experience significant economic strain and/or insolvencies, given the magnitude of the current cumulative estimated claims,” the senators wrote.

“Adding another point of stress during these times, this would likely put our businesses in an even worse position — draining the U.S. insurance reserves to pay these claims could leave us in a position of having inadequate reserves to cover claims that are actually intended to be covered, such as damage from wind, fire, hail, and other covered perils,” they added.

Under the state-level bills, insurers would be able to seek recompensation directly from the states, which would pay out through new fees on the insurance industry.

The idea has been met with fierce opposition from insurance industry lobbyists.

The GOP senators argued that Congress has already addressed covering small-business losses through billions of dollars' worth of new lending facilities.

The senators warned that retroactively requiring insurance companies to cover business closure losses because of the pandemic would “create major unintended consequences for new contractual relationships.”

They warned that the changes would be “litigated in the courts for years,” guaranteeing that “no money would make it to small businesses that need it.”

“We stand ready and willing to work with you and our Congressional colleagues to ensure that U.S. small businesses have the funds they need to survive this difficult time,” the senators wrote.

“However, we cannot help one segment of the economy by seriously harming another. We must continue to work diligently to get the PPP funds out to as many small businesses as quickly as possible. If it becomes clear at some future point that we need additional funds or facilities to get necessary federal money in the hands of small businesses, we will work to achieve that goal at that time,” they added.