August 6, 2020
The Chubb Group of Insurance Companies, one of America’s premier carriers, announced on July 8th an interesting and appealing outline of risk and insurance to replace the much-maligned payroll loan programs of the federal government.
In response to COVID-19, the U.S. Government loaned trillions of dollars to businesses with the primary intent of continuing payroll expenses, thus keeping workers paid and businesses afloat during the resulting financial crisis.
Because of clogged websites and other disruptions, most of the initial money flowed to large and very large businesses who have other means of raising capital as most do not rely on daily cash flow to support their overall activities.
The fact that some of the debt could be forgiven was a huge incentive for any business to gain access to these “loans”.
The new Chubb Group plan seeks to eliminate this distortion by using a two-part scenario, based on the size of participating businesses by using the number of employers as a measure. The Chubb Group outlines a public – private partnership in place before the next pandemic that recognizes the differing needs of small and large businesses. Here are the key elements:
For Small Businesses – Business Expense Insurance Program (BIP)
The objective is to provide immediate cash to small businesses so that they can continue to pay employees and ongoing business expenses, thereby limiting economic disruption.
For Medium and Large Businesses – Pandemic Re
Available to businesses with more than 500 employees, Pandemic Re is an indemnity-based program in which both the insurance industry and the government are paid an appropriate risk-adjusted price for pandemic coverage.
This private public partnership is not unusual after major catastrophes, where only the federal government has the resources to fund the potential losses. Numerous federal/private programs are in place, including:
In addition to the Chubb plan, various other Pandemic solutions have been brought forward:
The Fedeli Group will keep you informed as all these financial plans develop. However, in the interim, please call or email us with any questions or comments.
January 29, 2024
Much is written regarding the state of the personal insurance marketplace in 2024. An article in the Wall Street journal on January 8, 2024, maintains that “Buying home and auto insurance is becoming impossible.” WSJ further assert that “For many Americans, getting insurance for both their cars and home has gone from a routine, generally […]
February 22, 2022
The famous actor and author Will Rogers once said, “You never have a second chance to make a good first impression.” You may ask what that has to do with your year-end financial statement? More than you might think. Contractors who need surety bonds must provide their surety with a CPA prepared year-end financial statement. […]