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The Business Council strongly opposes S.8211-A (Gounardes) / A.10226-B (Carroll), which would mandate that business interruption insurance policies, that do not cover pandemics, to ex post facto provide coverage for losses that occurred as a result of the COVID-19 pandemic. While well meaning, this bill has both immediate and long-term negative implications for businesses of all kinds throughout the state.
The Business Council, as the leading voice of business in the state, has been incredibly busy during this unprecedented public health crisis, helping businesses of all kinds, members and non-members, large and small, navigate the myriad of problems that the pandemic has caused, as well as the various government mandates and programs designed to fight the spread of the disease and its devastating impact on businesses, employees and owners alike. We are deeply concerned with the ability of businesses around the state to recover and will continue to work toward that goal throughout the re-start process. It is for this reason that we have very serious concerns about this legislation.
We recognize that most business interruption insurance policies specifically exclude viruses or bacteria. We also recognize that with much of the state shuttered, many businesses would prefer that the coverage instead included those items that they had agreed to exclude. However, we all know that changing the rules of the game after the fact would simply shift the economic burden from one sector of businesses to another. Such an action would be inconsistent with recovery efforts and the variety of relief packages being implemented by the federal government.
Further, as representatives of business, we find this bill’s approach to the ex post facto modification of legitimate contracts troubling and constitutionally questionable. The United States Constitution’s Contract Clause was designed to specifically protect citizens and businesses from the alteration of their contracts by their government. This bill would not only interfere with contract, it would completely rewrite the terms of insurance policies after premiums have been calculated and collected and terms were agreed to. This bill would force companies to pay for things they had never insured for. The precedent of this kind of contract interference, where one can no longer rely on the terms of a contract, less government change it at will, will be felt by every business and every New Yorker who enters into a contract into the future. We recognize that these are unique times with unique problems, they do not however call for a fundamental rewriting of the basic concepts of the US Constitution.
The enormity of the financial toll of this legislation is difficult to fully comprehend. It has an estimated cost of $30 billion per month in New York. Since insurance companies did not agree to insure for this, they never collected premium nor put money in their reserves. The passage of this legislation will most certainly create serious and dangerous solvency issues for many carriers. This will in turn undermine all of the other insurance products that we all rely on in our business and personal lives.
The Business Council is committed to helping businesses in New York survive the COVID-19 disaster. We understand and appreciate the severity of the economic impact the pandemic has had on our members and other businesses. We salute the efforts of the federal government in helping create financial relief for employers and we look forward to more programs to help those in need. This is why we know that it is critical that the Legislature handle relief in a well-conceived and efficient way that takes advantage of federal aid and does not simply pass the economic hardships created by the Coronavirus from one business to another.
It is for these reasons that The Business Council strongly opposes S.8211-A (Gounardes) / A.10226-B (Carroll) and urges its rejection by the Senate and the Assembly.