Business Continuity Protection Program 

(Updated September 2020) 

Insurers fundamentally agree that pandemic business interruption is an uninsurable risk. This proposal 

would establish a voluntary federal program within the Treasury Department that allows for the 

purchase of revenue replacement assistance for business interruption caused by viral pandemic or other 

epidemic infectious disease that have been federally declared as public health emergencies. 

The proposal also establishes a voluntary federal excess coverage program with a federal backstop for 

losses beyond what is covered by the BCPP’s revenue replacement assistance and provides for the 

design of financial protection products to address event cancellations resulting from pandemic 

emergencies through rulemaking requirements. This proposal contemplates the creation of the Business 

Continuity Protection Program (BCPP) authorizing the Secretary of the Treasury to name a director and

stand up the program within Treasury with an effective date six (6) months after enactment of the 

legislation.

Program Purpose

• The program is designed to bolster the country’s economic resilience by providing timely and

efficient financial protection including payroll, benefits, and expense support to the private

sector in the event of a future declared public health emergency

• To enable interested businesses and nonprofit institutions to purchase access to revenue

replacement assistance, excess coverages, and event cancellation protection and thereby

affordably obtain financial protection from economic shutdowns due to viral outbreaks not

found in the private market

Participating in the Program

• Eligibility –Revenue replacement assistance will be available to any interested firm incorporated

in the United States or a U.S. territory

o All for-profit and non-profit entities would be eligible

o Entities would not be barred from purchasing assistance due to size

o Entities must enroll at least 90 days prior to a Presidential viral emergency declaration in

order to receive assistance payments

• Application – The program director shall develop a simple program application process

o An easy to complete, one-page electronic application form for participants

o Program director would request the business’ previous one to two years of annual tax

returns to determine expected assistance benefit

 IRS Form 1120 (e.g., Lines 13, 14, 16, 17, 18, 23, 24 and 26)

 Form 990 (e.g., Lines 15, 17, etc. – similar to above 1120 lines)

 Other official forms as the program director allows
2 

o Businesses with physical locations in more than one state would specify the allocation of 

risk at time of purchase (EX: 40% of their revenues in NJ and 60% in NY)

o Provide the business categorization based on the North American Industry Classification 

System (NAICS) for purposes of determining assistance benefit formula based on closure 

status 

o The business owner would be required to attest to certain things on the application

 The facts of the application

 Future compliance with federal CDC, OSHA, and other specified guidelines

 That the funds would be used to retain employees and keep the business viable

o The Program should work with risk mitigation experts (e.g., the Insurance Institute for 

Business and Home Safety’s (IBHS)Open for Business-EZ program, the International 

Organization for Standardization [ISO], and/or others) to develop viral risk mitigation 

guidelines and safety standards for businesses that would be provided at time of 

application and payment

• Term of Participation – The program would be open to participants six (6) months after the date 

of enactment and each certificate issued would be valid for up to one year 

o Once purchased, the program director would provide the details (amount, frequency, 

and other information) related to the expected assistance benefit

• Renewal – Once purchased the terms of participation cannot be cancelled or altered, but 

participation is guaranteed to be renewable on an annual basis

o With each annual renewal participating organizations will be required to submit 

updated tax information to provide ongoing proof of revenue and expense information

o Participating organizations will also be required to review, select, and purchase 

assistance annually

Distribution Network

• The successful support of the U.S. economy during the next pandemic will require a robust level 

of participation in the BCPP 

• Licensed insurance agents and brokers will be authorized to act as the distribution network to 

market and sell the program’s revenue replacement assistance

• Insurers will be required to offer the federal program product to all policyholders who purchase 

covered lines of commercial insurance coverage 

• Businesses and non-profits declining protection must sign a declination page acknowledging 

they will be ineligible for BCPP benefits 

• The program director will establish an administrative fee for application and enrollment 

servicing 

Revenue Replacement Assistance

The program would provide participating entities with revenue replacement assistance based on a 

percentage of the participant’s total payroll and expenses
3 

• Participants could receive up to a maximum of three (3) months relief

• Assistance amount would be for up to 80% of:

o Ordinary payroll and employee benefits;

o Contractually obligated payments;

o Rent or mortgage obligations for commercial property;

o Other loan obligations;

o

o

Equipment rental and maintenance costs;

Tax and insurance payments; and

o Other categories of acceptable expenses as the program director see fit to promulgate

by rule

• No profits, extra expense, high level compensation or other costs would be considered as part of

this program

• Participating entities could choose from desired levels of protection that would be predetermined by the program director (i.e. 20%, 40%, 60% - up to a maximum of 80% of the

program determined expenses)

• The program director would also develop a pre-determined formula for any partial or nonpayment based on determinations of an “essential business” by closure order / presidential

declaration

Pricing for Assistance

The program director shall from time to time provide by regulation for general terms and conditions 

regarding the amounts paid for access to the program’s revenue replacement assistance

• Rates charged by the program will be calculated as a percentage of revenue each participating

organization seeks to replace (payroll and applicable expenses)

• That percentage will be uniform for all participants, and will not vary based on geography or

industry

o The risk of pandemic business interruption presents a unique case in which risk-based

premiums could actually induce even greater moral hazard

o A risk-based model would require firms most likely to be vectors of viral transmission—

such as restaurants or hotels—to pay higher rates

o That would have the effect of depressing the take-up of the program protection and

make it more likely that businesses would resist closing their doors

o Aligning public health interests with policy design recommends instead pricing coverage

to maximize take-up by those firms most exposed to the risk of pandemic to align

incentives properly for a public health-oriented program

• The program director would set appropriate minimum amounts for assistance

• Pricing would include a charge for administrative costs

• Pricing would be designed to ensure widespread take-up and reduce moral hazards

• The program director would develop a payment plan option
4 

Assistance Payment Trigger

Revenue replacement assistance would be parametrically triggered and disbursed automatically 

to those affected businesses based on a formula and the protection level selected 

• Public health emergencies generally are declared by state and/or local officials, however,

deferring to such declarations to trigger coverage under the BCPP could run afoul of the

nondelegation doctrine

• Based on the on-the-ground situation, states would request a federal viral emergency

declaration

• The contours of the presidential emergency declaration would be laid out in the authorizing

legislation which would include the states and business codes of the industries impacted

• The presidential viral emergency declaration would automatically trigger payment

Assistance Payment Process

Once a presidential viral emergency has been declared and BCPP assistance triggered, payments will 

immediately be disbursed based on a pre-determined formula

• Provided access to assistance was purchased 90 days prior to the presidential declaration,

payments would be wired electronically without waiting periods or further requirements

• Participating firms would receive the first full monthly benefit upfront, with additional payments

for additional months distributed as needed at 30 and 60 days (for the maximum 90-day

protection period)

• Declaration of a public health emergency in a state where a participating business is located

would trigger assistance for that portion of a participating organization’s expenses located in the

emergency zone (as allocated in the application form)

• There would be no traditional claims or claims adjustment process

• Payments would be distributed directly from the federal government to the program

participants

Program Asset Management

The program director shall be responsible for the careful management of the BCPP’s accrued assets 

year-over-year

• In years without losses, which should be most years, collected program funds could be used to

purchase Treasury securities, which would be credited under federal budget rules as program

assets

• Because the program’s exposure in any loss year is likely to exceed its available assets, the

program should be granted authority to borrow from the Treasury to pay all recorded losses

• To the extent that demand exists for risk transfer at some price and attachment point, the

program director could be authorized to retain brokerage services to leverage coverage by using

participant payments to place traditional reinsurance or issue insurance-linked securities

Auditing Process / Penalties

• A final audit and accounting of all funds will be completed annually by the federal government

no later than 12/31 for any fiscal year ended 9/30
5 

• The program director will establish a post-event auditing process for beneficiaries of the BCPP to 

ensure the validity of application attestations

• Any participating firm found to have knowingly defrauded the program will be expelled and be 

subject to stringent penalties, including fines and jail time

• The program director shall be granted clawback authority to require the return of benefits not 

applied to allowable expense categories 

Additional Excess Coverage Backstop

• The proposal would also establish a federal excess insurance backstop to facilitate additional 

private insurer coverage for losses beyond what is covered by the BCPP’s revenue replacement

assistance

• Participation in this program would be voluntary for both insurers and policyholders – insurers 

would not be required to offer the excess coverage and policyholders would not be required to 

buy it

• Insurers eligible to participate would include those that are admitted in any state, non-admitted 

insurers that are eligible surplus lines insurers, insurers approved for purposes of offering 

property-casualty insurance by a federal agency in connection with maritime, energy, or aviation 

activity, and state residual market entities or state workers compensation funds

• Businesses would need to first participate in the BCPP to purchase this excess product

• Insurers offering business continuity insurance related to business suspension due to an 

emergency pandemic closure order, including event cancellation or principal speaker 

cancellation coverage, would be able to utilize the federal backstop

• An insurer would pay claims directly to policyholders and submit claims for reimbursement from 

the federal backstop (potentially establishing a line of credit with the federal government)

• The federal co-share would be 90% and insurer co-shares 10% of each calendar year’s losses 

(the co-share would not change for the duration of the program) 

• There would be a prohibition on duplicative compensation, but insurers are expressly permitted 

to purchase reinsurance to cover their retained risks 

• The bill includes an automatic appropriation to fund both federal claims payments under the 

backstop and expenses of administering the program. 

Event Cancellation Protection

• The program director would also design financial protection products to address event 

cancellations resulting from pandemic emergencies through rulemaking requirements: 

o Requires that a parametric event cancellation product be created and integrated with 

the revenue replacement assistance product by the end of 2021 

o Requires that the excess backstop support private insurance coverage for event 

cancellation by the end of 2021 

Miscellaneous

• The BCPP would be run by Treasury, with limited administrative assistance from private contractors

• Businesses purchase this protection product through state-regulated insurance entities that 

voluntarily participate with the BCPP
6 

• Entities marketing the program or contracting with Treasury to administer the program would 

not assume any liability for the application process or the determination and payment of 

benefits

• Aggregated data on prices and payments would be publicly available