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R.I. lawmakers consider requiring insurers cover coronavirus-related business losses

PROVIDENCE — Count West Warwick caterer Kevin Millonzi among the Rhode Islanders who got a letter from their insurance companies telling them they were not entitled to anything under their “business interruption” policies because the government shut them down.

There is no question, the executive orders that Governor Raimondo issued to try to minimize the spread of the coronavirus led to cancellation after cancellation and ultimately to the layoff of all of Millonzi Fine Catering’s employees.

“If you paid a policy premium, why should you go have to go borrow the money to put yourself back in business?” he said Monday.

“That’s why we took these insurance policies out, for the worst-case scenario,” Millonzi said. “To me this is probably the worst-case scenario that has ever happened to any business ever … in the history of the world.”

Millonzi says he has hired a lawyer to ready a lawsuit — akin to the lawsuit that well-known California restaurateur filed against a unit of The Hartford.

Rick Simone, executive director of the Federal Hill Commerce Association, says he is aware of dozens of business owners who received similar letters from their insurance companies, advising them their business losses as a result of the pandemic are not covered.

More than one Rhode Island lawmaker, including Rep. Joseph McNamara, the state Democratic Party chairman, have pledged to introduce legislation to require commercial insurance companies to cover certain coronavirus-related losses.

On Monday, Rep. John Lombardi, a Providence Democrat who represents Federal HIll, provided The Journal a draft of his bill, titled: “Covid-19 Pandemic Insurance Recovery Act.”

The stated intent: to provide “a mechanism by which certain businesses that suffer losses due to an interruption as a result of the coronavirus disease 2019 pandemic may recover those losses from their insurer if they had a policy of business interruption insurance in force on March 9, 2020, the date on which the Governor declared a Public Health Emergency and State of Emergency.”

The legislation would apply to businesses with fewer than 100 employees, and it leaves a door open for the insurance companies to “apply to the Department of Business Regulation insurance division for relief and reimbursement from funds collected and made available for this purpose.”

With the legislative session suspended, there is no way for any lawmaker to introduce a bill right now, but McNamara, D-Warwick, vowed in late March to try to address the same problem by requiring “insurers to approve claims notwithstanding any virus exclusions or policy requirements that there also be property damage accompanying the business interruption.”

The response? David A. Sampson, president and CEO of the American Property Casualty Insurance Association says his industry “opposes these types of proposals, as they could compromise the financial ability of insurers to meet their existing promises.”

“Spring flooding season is underway and hurricane season is around the corner. The people who rely on insurers to keep their everyday promises made in existing insurance policies should not be put at risk.”

“Only the federal government can be the bridge for a crisis of this proportion,” he said. in an email.

As for when the legislature might reconvene, House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio have submitted an op-ed to The Journal, that says, in part:

“Yes, the General Assembly will need to reconvene in the coming months. However, due in large part to the issues we have collaboratively addressed with the Governor, we will not need to meet during the height of the pandemic.

“We are exploring the possibility of limited remote sessions, but we prefer to legislate in person to ensure public access,” they said.

“Some have scoffed at the suggestion that there are Rhode Islanders who do not possess the sophistication or economic privilege to participate in remote meetings, but if you have ever hosted a neighborhood meeting at a senior center or sat through a hearing on transportation funding you know the most vulnerable Rhode Islanders will not have the ability to participate in remote meetings.”