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4 Ways Election Could Change Insurance Landscape

4 Ways Election Could Change Insurance Landscape
(Alain Lacroix/Dreamstime)

By    |   Friday, 02 October 2020 10:13 AM

As voters hit the ballot boxes in November, a number of their decisions will likely reverberate through the insurance industry for years to come.

From who is elected president, to who sits on Capitol Hill, voters’ voices will help cast the direction for the future of many types of insurance.

Health

Health insurance has been a hot-button political issue ever since Congress passed the Affordable Care Act back in 2010. 

The latest battle over the Affordable Care Act comes before the Supreme Court on Nov. 10 – a mere seven days after the presidential election.

Following Supreme Court Associate Justice Ruth Bader Ginsburg’s death, all eyes are on the court to see if it will, at least in part, strike down the Affordable Care Act.

In the world of health insurance, the Affordable Care Act has been likened to the “plumbing” of the entire system. It sets strict rules about what must be covered. It also mandates, among other things, that people with pre-existing conditions be offered the same coverage as everyone else.

Presuming the law is struck down, its replacement is going to fall to whomever is the next resident of the White House, along with the leaders of the next Congress.

For his part, President Donald Trump has promised that he has a health care plan that will be better, less expensive, and still cover pre-existing conditions. But no details have been released publicly.

Democratic nominee, Joe Biden, instead supports a tuned up Affordable Care Act, expanded to include things like a public health insurance option akin to Medicare for anyone who wants it.

Obviously, a replacement law will take time, and ultimately will depend on which parties come out victorious.

If the law is overturned, that doesn’t mean people will immediately lose their coverage. That is because health insurance contracts are written on an annual basis and will likely remain in force even if the court strikes down the law governing them.

However, it does mean there will be a clock ticking, because while those policies will continue, they almost certainly will not be renewed for the 2022 policy year without a replacement law in place. That could mean the loss of health care for as many as 30 million people.

Business Interruption

With the COVID-19 pandemic, businesses across the country turned to their business interruption insurance policies to find some relief from the forced closures. Most were disappointed.

Business interruption insurance is designed to step in when there is physical damage to a business, such as during a weather event, or following a fire.

Because the pandemic doesn’t technically cause physical damage, nearly all of these claims were denied by the insurers.

To further complicate matters, many, if not most of these policies included language specifically excluding losses from pandemics from being covered. 

To counter these issues, politicians want to step in.

A handful of bills have been introduced to the House of Representatives, largely by Democratic members, that would provide some manner of relief for these businesses.

Some of the laws aim to force insurers to pay out these claims, while others take a more nuanced approach and propose a system where state-regulated insurance companies offer pandemic insurance policies, but the federal government would serve as a financial backstop and pay out if major claims had to be filed. In this way, it would treat pandemics much how floods are treated. 

None of these proposed laws have gotten any traction in the Senate, but if control flips after November, it is possible that a new Democratic majority might be interested in taking up one or more of these proposals.

Liability

That is not to say that the current Senate is uninterested in post-pandemic insurance policy issues. Under Majority Leader Mitch McConnell, Senators are more focused on liability protections.

As part of the stalled HEROES Act, Senators proposed limiting liability in the case someone contracts Coronavirus after returning to work.

Absent these protections, if someone did get sick, they could file suit against their company, triggering a liability insurance settlement.

In the House, liability protection wasn’t seen as favorably, and instead was seen as putting people at unnecessary risk without giving them recourse if they ended up getting sick.

Negotiations on these protections have not moved forward.

This is another area where if Congress were to flip — this time the Republicans gaining control of the House, legislation may find a more friendly audience.

Unemployment

The CARES Act expanded state unemployment benefits by adding a $600 per week supplement to what the states were already paying.

That was only designed to last through August, and fighting over what should replace it has derailed negotiations.

Many business owners argued that offering people $600 per week meant that some people were earning more on unemployment than they would have earned at work, creating a disincentive to return to their jobs.

Hearing that criticism, the Senate proposed replacing the weekly payments for a $300 benefit, but House leaders argued it should stay at $600.

While they were arguing their points, Trump stepped in with an executive order, repurposing Federal Emergency Management Agency funds giving states $300 per week federal supplements.

The executive action was limited, though, and is already running out of funds.

Conclusion

There are a lot of insurance questions leading into the election. There is one near certainty, though. Absent congressional action, this pandemic will almost certainly prompt insurers to introduce pandemic exclusions on new policies where they were none before, and to strengthen the language excluding pandemics in policies that already meant to leave them out. 

How the newly seated Congress and whoever wins the presidency solve these issues will likely be felt through the insurance industry for years to come. 

Michael Giusti is a senior writer at InsuranceQuotes.com. He has worked as a journalist for more than 20 years, specializing in business, insurance, finance, technology, automotive and industry-focused writing.

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As voters hit the ballot boxes in November, a number of their decisions will likely reverberate through the insurance industry for years to come.
election, insurance, change
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2020-13-02
Friday, 02 October 2020 10:13 AM
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