Current Issue

With Joseph R. Biden’s election as the 46th president of the United States and the close run-off Senate election in Georgia, the Democratic party now controls both the executive and legislative branches for the first time in a decade. Many in the risk management community are now wondering how this shift will impact important policy strategies moving forward. 

The Biden Presidency

Six days before President Biden was sworn in on January 20, he released a $1.9 trillion coronavirus relief plan titled the American Rescue Plan. Similar to past proposals from Democratic administrations that inherited poor economic conditions, the plan aims to provide relief to those in need, in this case, until the COVID-19 vaccine is more widely available and the economy can recover on its own. It includes larger stimulus measures for individuals, states and schools as well as funding for states to administer COVID vaccines swiftly and efficiently.

In addition to his coronavirus proposals, President Biden has indicated that he plans to undo many Trump administration initiatives. This includes introducing a new tax plan, rejoining the 2015 Paris Agreement on climate change, and tackling problems with several of the previous administration’s immigration policies.

With his recent appointments, President Biden has also demonstrated a desire to strengthen cybersecurity in his administration. For example, he created a new cybersecurity position on the president’s National Security Council and appointed Anne Neuberger, the current cybersecurity director at the National Security Agency (NSA). He has also nominated several agency leaders who have notable cybersecurity experience.

A Split Congress

The victories of Raphael Warnock and Jon Ossoff in Georgia earned two more Senate seats for Democrats, creating a 50-50 split with Republicans, as Independent Senators Angus King (Maine) and Bernie Sanders (Vermont) caucus with the Democrats.

While Vice President Kamala Harris can step in if a tie looks likely on a particular Senate vote, the 60-vote threshold to move past a filibuster will remain in place for most legislative business. However, 51 votes would allow Senate Democrats to push through Biden’s nominations for the Cabinet, the judiciary and key agencies like the Federal Reserve. Senate committee leadership will also go to Democrats, allowing them to shape the Congressional agenda by determining which bills make it to the floor for votes. 

Even when a simple majority is sufficient, Democrats must rely on every senator in their ranks and some Republicans to support certain bills and pass legislation. This means that both extreme left and extreme right agendas will likely not make it far enough for a vote.

In the House of Representatives, the large number of Democratic losses during the November election has forced Speaker Nancy Pelosi to hold together a slim 11-vote majority—the narrowest margin of Democratic control since the 1940s. This also means that the House will be unable to pass legislation without support from Democratic members and that any controversial legislation is unlikely to make it to the floor.

While the Republican-led Senate has ignored several House Democrat legislative priorities for years, including changes to health care, gun control and trade policies, it is likely that negotiating another coronavirus economic relief bill and Capitol breach oversight hearings will take precedence in the first few months of the new Congressional term.

Pandemic Insurance Coverage

Congress worked frantically to pass coronavirus relief legislation in March 2020, including measures to help keep companies afloat financially. Yet risk professionals remained uncertain about a key recovery issue: whether coronavirus-related business interruption losses would be covered under their current property policies. 

Many companies were not prepared for closures and cancellations due to COVID-19 and did not have specific pandemic-related business interruption insurance coverage. This forced them to get creative to recoup lost revenue from their policies, including through court proceedings.

The property/casualty insurance industry estimated that business interruption losses from COVID-19 in the United States could be between $250 billion and $450 billion per month—an amount that would likely make insurers insolvent. As a result, when policies were renewed for 2021, risk professionals were met with new pandemic exclusions and, in most cases, higher premiums.

To address this issue and provide businesses with greater certainty to move forward, one of the leading issues for the risk management and insurance community is the idea of government-backed pandemic insurance coverage, similar to the Terrorism Risk Insurance Program (TRIA). Last May, Representative Carolyn Maloney (D-NY) introduced H.R. 7011, the Pandemic Risk Insurance Act, which sought to provide a TRIA-like backstop to help insurance companies cover the costs of business interruption and related claims in the event of another pandemic. This legislation was met with harsh criticism from the insurance community as some believe pandemics are not insurable. It did not pass during the last Congress.

Much of the pushback for the PRIA legislation on Capitol Hill was led by Republican members of Congress in both the House and the Senate. A Democratic-led Congress could mean that legislation creating a public-private pandemic insurance program could pass as soon as this year.

Whitney Craig is the director of government affairs at RIMS.