On July 8, 2020, Chubb Insurance released its Pandemic Business Interruption Program. This video provides a short overview of the proposal. The proposal is split into two parts. Part I is called the Business Expense Insurance Program. This part is aimed at businesses with less than 500 employees. Up to $750 billion in payouts would be available through formula-based (parametric) benefits meant to facilitate quick and simple claims processes Part II is Pandemic Re. This part applies to businesses with more than 500 employees. Up to $400 billion in payouts would be available through indemnity contracts covering actual expenses and go through the normal claims adjustment process. The bulk of financial risk under $1.15 trillion program would sit with the federal government. Insurers would be responsible for up to $35 billion in losses.

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Chubb’s Proposed Pandemic Business Interruption Program
Pandemic Response
CBI
CBI-PAN-20-24

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Pandemic Business Interruption Program
Introduction

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Insurance Industry Capabilities
• Front-end distribution capabilities
• Back-end claim administration capabilities
• Targeted financial participation in the pandemic risk
The proposal relies on the insurance industry for:

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Pandemic Business Interruption Program
Program Objective
After a waiting period, a participating business would receive funds to cover:
• Payroll expenses
• In some cases, continuing operating expenses
(e.g., rent and utilities)

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Pandemic Business Interruption Program
Two-Part Program
Business Expense
Insurance Program
Pandemic Re
Part I Part II
500 or fewer employees More than 500 employees
• Formula-based benefit
• Quick and simple payout
• High participation rates
• Indemnity-based benefit
• Normal claims process
• Lower expected participation

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Pandemic Business Interruption Program
Part 1: Business Expense Insurance Program
Every small business insurer must offer this program.
A small business may opt out of the program by acknowledging:
1. It will not have insurance coverage for pandemic losses.
2. It will not be eligible for federal program benefits.
A business’s benefit would set at the time
of purchase to 3 times its monthly payroll
subject to a 2-week waiting period.

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Pandemic Business Interruption Program
Part 1: Business Expense Insurance Program
$750 billion
Federal Share
Federal Share
$250 billion
Insurer share grows from 6% to 12 %
over the 20-year life of the program
Policyholders would pay a
“risk appropriate” charge
for the insurer share. Policyholders pay nothing
for the federal share.

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Pandemic Business Interruption Program
Part 2: Pandemic Re
Insurers and businesses may opt to participate in this program.
A business may purchase up to 3 months
expense coverage subject to a $50 million limit.

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Pandemic Business Interruption Program
Part 2: Pandemic Re
Federal
Pandemic Re
$400 billion
Insurer share grows from 5% to 10 %
over the first 10 years of the program
Policyholders would pay a “risk-
appropriate” charge for both the
insurer share and federal share.

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Pandemic Business Interruption Program
Additional Information
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