Q&A: Sen. Nelson Discusses Life In Politics, Dealing With A Recession, And The Role Of Insurers In Our Communities

As the election nears and prospects of additional federal aid to businesses and struggling Americans remain in limbo, the Future of American Insurance & Reinsurance (FAIR) spoke with former Nebraska Governor and U.S. Senator Ben Nelson about his time in public office, his experience dealing with the Great Recession as a senator, the role insurers play in their communities, and the kind of federal response that is needed during a crisis like the one we face today.

Lamson Dugan & Murray

Q: Tell us a bit more about your career. What led you to run for public office after a successful career as an insurance executive? What was that transition into public office like?

I knew I wanted to run for office since I was 17. Back in high school, Nebraska had a mock legislature over the Thanksgiving holiday. I was one of four candidates for governor (one for each Congressional district) and I won. I signed and vetoed mock legislation. Seeing what it was like to hold such an important office, I decided right then I wanted to do that again someday. I even told my wife before we got married I would run for governor one day. She didn’t take me seriously, of course, nor did my friends. So I got a law degree, worked in insurance, and got business experience to prepare myself to run for office. Once my kids were in college, I ran for governor against the incumbent, and despite no prior government experience, I won. After a successful reelection campaign and a second term, I decided to run for the U.S. Senate, where I also served two terms. 

Q: How did your experience working in the insurance industry inform your work in public office?

Working in insurance, I learned all about the security that insurance provides. Health insurance, property insurance, liability insurance, and retirement plans all help provide people with the peace of mind they need to lead their lives. I wanted my work as an insurance regulator to help provide people security by regulating the insurance industry and its coverages. We all want safety and security for our families and the homes we’ve made. National security is a similar concept, providing security to all Americans. So as a member of the U.S. Senate Armed Services Committee, I channeled that experience and used it to pursue policies that helped provide national security to all Americans.  

Q: While you were in office, you and your colleagues also faced a big economic crisis, which at the time had been the most serious financial crisis since the Great Depression. What did you learn from that experience in terms of the role the government has to play?

The Great Recession hit rather rapidly and it quickly became clear that it was going to be huge in terms of size and economic impact. It also became very apparent the government response would need to match the magnitude of the event. When President Obama took office, we considered a wide range of measures to address the crisis, including many large initiatives like the Troubled Asset Relief Program (TARP) and bailouts of banks and the auto industry. My colleagues and I worked to develop and enact a bipartisan stimulus package, and we were able to put a jobs bill in place that contained shovel-ready projects to assist businesses and industries to stimulate the economy. What we saw in the Great Recession was the impact of the crisis outstripped the capacity of any one industry or business to fix it. A government program had to be in place to help; only the federal government could help. There was then, and there is now, an important role for the government to play, so Congress needs to find that role. It’s not just something you can quickly draw up or put together; it has to be targeted, it has to be timely, and it has to match the magnitude of the crisis we’re facing. And we’re seeing a similar situation today. 

Q: We’ve seen a lot of finger pointing about who is to blame for the current state of businesses around the country, including some folks blaming insurers. As a longtime insurance regulator and executive, what do you think about that criticism?

Because insurance provides protection and security for businesses and individuals, during a crisis, you tend to look to insurers to protect you. That’s where people turn, but not everything is insurable. Not every event is insurable. There are limits to how much one can be protected. If it’s not covered by insurance, is it sufficiently important for the economy? If so, the government should step in. This was the case with the Great Recession and it is the case now with the COVID-19 pandemic.

Global pandemics are basically uninsurable; insurance was not designed to insure events of this magnitude. Major crises like the one we face today are the responsibility of the government to address. It’s one thing to insure forest fires or tornados or other physical damage, but global pandemics are nothing like that. They are not limited in terms of time or geography like other insurable events. When business insurance isn’t capable of handling that kind of an event [COVID-19 pandemic], it is fair for us to look to the government to help. Pandemic-related expenditures could total trillions of dollars, depending how long the pandemic continues, and could decimate the economy. The federal government can and must provide critical financial support for this pandemic, as well as work to prepare for future pandemics. There will be more crises that are too big for insurance to handle, and the government must be ready. Congress needs to think critically about which preparations it must undergo to be prepared for a future crisis of a similar size.

Q: What is something you think gets misconstrued about the role institutions like insurers play in our economy and communities?

Insurance provides coverage and protection for businesses and individuals but naturally, there are certain limitations. Each policy isn’t, and can’t be, all-encompassing, or premiums would not be feasible or affordable. In general, businesses need a better understanding of their coverage. Just because they have insurance it does not mean that pandemic-related losses are automatically covered. There is no trick, just a recognition that certain risks cannot be insured.

Q: What form of relief do we need to see right now to help struggling businesses and business owners?

The federal government has already taken considerable steps, like with the CARES Act, to help businesses and individuals, including providing additional unemployment insurance aid to states. The Federal Reserve has also taken important and significant steps to help stabilize financial markets and support the flow of credit in the economy. But it has not been enough. Unemployment numbers are still very high, and businesses around the country are still struggling. Especially as we enter the cold winter months and see a virus resurgence, Congress needs to create and enact additional measures to support struggling Americans during this crisis. We need a government-backed pandemic solution to provide businesses with relief without jeopardizing existing insurer commitments.

Q: What should we do to prepare for the next pandemic in terms of risk to American businesses?

We don’t yet have all the answers, but I think we recognize there needs to be a better and faster way to support American business owners. Engaging in all this litigation we’re seeing right now is certainly not the way and will end up having adverse effects on the economy. We need Congress to come together, work with businesses, industry leaders, and insurers to find a way to handle the losses from an event of this magnitude. There will be future viruses and the federal government must understand its role and be prepared to step in to appropriately support businesses across the country.

Ben Nelson is a former U.S. senator and governor for Nebraska and the former director of the Nebraska Department of Insurance. He also served as the chief executive officer of the National Association of Insurance Commissioners from 2013 through 2015. He is currently the CEO of Insurance Care Direct, a health insurance agency in Florida.


FAIR is an initiative of the Insurance Information Institute and its member companies, whose mission is to ensure fairness for all customers and safeguard the industry’s long standing role as a pillar of economic growth and stability. For more information, visit and follow @FAIRInsure on Twitter.


COVID-19 Is Another Profit-Seeking Opportunity For Trial Attorneys, American Tort Reform Association’s President Says

President of the American Tort Reform Association (ATRA) Sherman Joyce recently published an op-ed criticizing the trial bar’s nationwide pursuit of misguided litigation against insurers, in an attempt to force business interruption insurance (BI) to cover COVID-19 losses.
Key takeaways from Joyce:

  • Many trial attorneys are seeking to capitalize on the pandemic crisis and judicial system for their own financial gain. “Now, trial lawyers are at it again, upending the legal and regulatory systems for their own benefit. Only this time, they’re using the suffering caused by COVID-19 to target a critical sector of the American economy: the insurance industry.”
  • It is clear that plaintiff attorneys are misguided when it comes to their anti-insurer litigation trend on BI claims. “For trial lawyers, there’s a lot of money to be made in suing insurance companies for COVID-19 relief. But there’s a problem: On this issue, plaintiffs simply don’t have the law on their side. Business interruption insurance has generally been understood to protect against losses caused by physical destruction or property loss.”
  • Forcing insurers to cover COVID-19 BI claims would be detrimental to the insurance industry—a backbone of the U.S. economy. “Their business interruption campaign not only threatens the integrity of the insurance industry and the American economy more generally, but it also weakens our nation’s fundamental democratic institutions.”

To date, there has been a growing list of court decisions in state and federal courts across the U.S. that prove standard BI policies don’t cover COVID-19 shutdowns. Direct physical loss or damage must occur for a BI claim to be triggered, and government orders do not constitute direct physical loss or damage to property.

If interested, the op-ed can be found here and is pasted below. For more information and resources, go to

Law360: Virus Insurance Shouldn’t Be Regulated Through Litigation
By: Sherman Joyce, 10/27/20

It’s been nearly two decades since Robert Reich, the former U.S. secretary of labor, wrote a prescient op-ed about what he called the era of regulation through litigation.

In the piece, Reich outlined a pattern of behavior in which litigators manipulate the American judicial system, using it to circumvent our nation’s traditional regulatory procedures and practices. Through the process of regulation through litigation — Reich’s aptly coined term — unscrupulous attorneys utilize lawsuits as a tool to establish judicial precedent, effectively imposing de facto regulation over the industry they wish to target. 

Whether it’s within the tobacco industry or the firearms business, litigators have previously used this technique to affect policy and alter law in their favor. It’s undeniably an insidious scheme — but nevertheless an effective one. Now, trial lawyers are at it again, upending the legal and regulatory systems for their own benefit. Only this time, they’re using the suffering caused by COVID-19 to target a critical sector of the American economy: the insurance industry. 

Keen observers of the legal sphere likely have noticed a growing trend as of late: the increasing frequency of COVID-19-related business interruption lawsuits. Across the nation, litigants have filed over 1,300 suits against insurance companies.

Interestingly, though, seemingly all those cases make essentially the same argument. They each claim insurers should be held liable for the financial damages incurred due to COVID-19 and the resulting economic lockdowns, despite Congress already providing nearly $350 billion in relief aid. If that sounds like a coordinated effort, that’s because it is. 

Why go through all that trouble, though? For trial lawyers, there’s a lot of money to be made in suing insurance companies for COVID-19 relief. But there’s a problem: On this issue, plaintiffs simply don’t have the law on their side.

Business interruption insurance has generally been understood to protect against losses caused by physical destruction or property loss. According to the National Association of Insurance Commissioners, business interruption insurance doesn’t typically cover losses related to a reduction of services or viral contamination.

This makes sense because if insurers were forced to cover the costs of every business across the nation affected by the lockdown, the insurance industry would collapse into bankruptcy. And the industry’s assets, needed for assistance during hurricanes, wildfires and other disasters, would cease to exist.

But for greedy trial lawyers, broader considerations for the economy always elude them. They want to profit off the backs of insurers and businesses struggling under COVID-19 — and they are using the process of regulation through litigation as a means to that end. 

Indeed, this campaign to flood America’s civil court system is straight out of the trial lawyer’s playbook. These civil attorneys first concoct far-flung legal theories which, conveniently, happen to further their own ambitions. They then market these theories to potential plaintiffs — individuals and businesses harmed by COVID-19 and desperate for relief. And after the lawyers have inundated the judicial system with thousands of meritless lawsuits, they wait for an activist judge to effectively rewrite the law by ruling in their favor. 

Such a ruling would establish the needed judicial precedent — a model for other courts to follow — providing the legal basis for insurers to bear financial responsibility for business losses associated with COVID-19. This creates a snowballing effect. One court’s decision influences a second, the second’s is then cited as precedent for the third, and so on.

The pattern continues until once plain reading of the general policy is lost under the rising tide of judicial precedent. In this way, trial lawyers can regulate the insurance market without ever passing a single piece of legislation. That is the power of regulation through litigation, and as is readily apparent, the consequences of that scheme are quite dangerous.

As Reich foresaw in his op-ed nearly 20 years ago, trial attorneys’ efforts to regulate industries through the judicial system create blatant end-runs around the democratic process. Their business interruption campaign not only threatens the integrity of the insurance industry and the American economy more generally, but it also weakens our nation’s fundamental democratic institutions.

Americans’ elected representatives — not the trial bar — should have the authority to regulate business within the U.S. The courts must restore that balance of power by rejecting the dreaded return of regulation through litigation. 

Sherman Joyce is the president of the American Tort Reform Association. 


California Judge Tosses Business Interruption Lawsuit Due To Virus Exclusion

Yesterday, U.S. District Judge Charles R. Breyer dismissed a proposed class action by Bay Area restaurants against a California insurance company because the insurer has a virus exclusion. 

When explaining his decision, the California federal judge said, “COVID-19 remains the ‘indirect’ cause of the insured’s harm,” meaning the virus exclusion expressly bars coverage. Plain and simple, Judge Breyer acknowledged that “the court cannot ignore that the insurance policy excludes coverage for losses caused by viruses, like COVID-19.”

Judge Breyer also held that the insurer’s virus exclusion refers not only to a stand-alone virus, but also pandemics. 

This is an important development in the ongoing litigation fight between business owners and their insurers across the U.S. You can review a compendium of court decisions affirming the necessity of direct physical damage in BI coverage here

Judge Breyer’s decision is further confirmation that insurers shouldn’t cover the costs of pandemic losses. Global pandemic risks are uninsurable, and the majority of policyholders’ business interruption contracts and premiums reflect that standard. 

You can read more about the California case in Law360 here.

For more information, visit


SETTING THE RECORD STRAIGHT: Breaking Down The North Carolina Business Interruption Decision

Earlier this month, a North Carolina court judge ruled in favor of a group of restaurants, finding that the insurer must cover losses resulting from state-mandated COVID-19 shutdowns even if COVID-19 had not caused property damage.

This is a first in more than 15 rulings that did not rely on the historical legal precedent that a virus does not cause direct physical damage. A few key conditions contributing to this decision have been overlooked, according to a summary by the Centers For Better Insurance.

The ruling also gave rise to the notion that ambiguous language favors the plaintiff, and for this reason, many more decisions like this will ensue. This assumption, however, is inaccurate for various reasons:

  • Insurance contracts are carefully underwritten, with clear parameters guiding the coverage. Litigation attempts to characterize insurance language as unclear or ambiguous often seek to rewrite existing policies.
  • As shown in our court decisions tracker, judges presiding over both federal and state courts overwhelmingly ruled in favor of insurers, citing that the COVID-19 virus does not cause “direct physical damage.”
  • This decision is not yet the final word on the case, given that the insurance company involved, Cincinnati Insurance Co., is appealing the decision.

Read more in-depth analysis on the decision here.

For more information and resources, visit


America’s Business Owners Need Federal Relief From Our Next Congress

With the election weeks away, the post-COVID economy is the top-of-mind issue for politicians and voters alike. Policymakers must establish a viable, sustainable, and inclusive government-backed solution to provide the immediate relief that business owners need if America’s economy is to truly recover. 

Although global pandemics are uninsurable, business owners around the nation are currently caught up in pricey, slow-moving litigation to fight their insurers for claims their business interruption insurance contracts did not cover. At least 13 court decisions made so far affirm that insurers cannot be held responsible for the economic devastation caused by this pandemic.

A new report by ratings company AM Best asserts that a government-backed pandemic risk backstop is necessary given that pandemics are uninsurable and the policyholder’s surplus is only so large. “Uncertainty from lawsuits aimed at insurers and legislative policy measures being contemplated that would nullify business interruption exclusions” will create major challenges for the insurance industry in determining reserve estimates and payout patterns.

In an Insurance Journal piece on the election’s potential impacts for the insurance industry, Andrew Simpson notes that the need for a government solution for managing pandemic risks won’t disappear when 2021 rolls around, “[r]egardless of whether Democrats or Republicans are in charge.” 

There are several proposed solutions out there already, including the Business Continuity Protection Program (BCPP) and the Pandemic Risk Insurance Act (PRIA), but no matter which policymakers are elected to serve in 2021, we need a solution that adheres to the following principles:

  • Maintain the federal government as a primary provider of relief, reflecting the reality that pandemic risks are not privately insurable.
  • Provide widely accessible relief payments to businesses in a fast and efficient manner once a pandemic is declared by the federal government, with minimal chance of abuse.
  • Protect businesses from losses, and incentivize businesses to retain employees, without jeopardizing existing insurer commitments.

For more information and resources, please visit 


ICYMI: Triple-I’s Sean Kevelighan Discusses Need For Federal Relief For Businesses Impacted By The Pandemic

Sean Kevelighan, CEO of the Insurance Information Institute (Triple-I), recently discussed the need for forward-looking federal solutions to support businesses impacted by the pandemic in an interview with Slayton Search Partners.

Kevelighan highlighted why insurers should not be asked to cover pandemic losses:

  • “Most insurable events are limited by time and geography,” said Kevelighan, “whereas the pandemic is impacting everyone, at the same time, everywhere.”
  • “If businesses have to close because of direct physical damage, business interruption policy will cover the losses incurred while closed. Viruses and bacteria do not trigger physical damage,” the Triple-I CEO further explained.

“These are trying times for businesses, but it’s not the insurance element that will get that relief,” concluded Kevelighan. “Only the federal government has the wherewithal to help support businesses and provide relief in this time of need.”

Watch the interview here.

For more information, please visit


Two More Judges Reaffirm Pandemic-Related Shutdown Orders Do Not Constitute Physical Damage

Over the past couple of weeks, two additional court rulings have reaffirmed that business interruption (BI) policies are only triggered by direct physical damage to property and are not designed to cover pandemic-related losses. These are part of a nationwide litigation trend—spearheaded by trial attorneys—attempting to retroactively change BI contracts to cover uninsured pandemic claims, jeopardizing insurers’ ability to meet promises to policyholders’ on covered claims.

  • U.S. District for the Middle District of Florida: “The judge rejected [policyholder’s] argument that economic damage is synonymous with physical loss. ‘Plaintiff’s argument is unpersuasive because Florida law and the plain language of the policies reflect that actual, concrete damage is necessary,’ he said.” (WestLaw Today, 9/29)
  • U.S. District Court for the Northern District of Georgia: “A Georgia federal judge has dismissed a [policyholder’s] COVID-19 business interruption coverage lawsuit, ruling that a government stay-at-home order did not cause the eatery to sustain ‘direct physical loss of or damage’ to its insured property or surrounding premises.” (HarrisMartin, 10/7)

To date, there has been a growing list of court decisions across the U.S. that affirm standard BI policies don’t cover COVID-19 shutdowns. Direct physical loss or damage must occur for a BI claim to be triggered, and government orders do not constitute direct physical loss or damage to property. For more information, please visit


ICYMI: MDL Panel Decides BI Cases Won’t Be Consolidated

Last week, the legal panel overseeing multidistrict litigation (MDL) in U.S. federal courts ruled that the hundreds of billions of dollars’ worth of business interruption (BI) claims tied to the pandemic cannot be consolidated. In their decision, the panel noted consolidation would slow down the progress of individual cases, many of which have reached the point where judges are ready to make decisions. 

“Having one judge oversee more than 1,000 cases — grouped by individual insurers — would be too cumbersome and it’s more efficient to have courts around the U.S. decide whether the coronavirus fallout triggered coverage by major insurers such as Hartford, Travelers and Lloyds of London, the legal panel ruled Friday,” a Bloomberg Law article explained. 

Bloomberg Law covered the story on October 2, and the Triple-I’s non-resident legal scholar Michael Menapace provided the insurance industry’s perspective in a written statement: “‘This is the correct result,’ Michael Menapace, a lawyer and member of the Insurance Information Institute, said in an emailed statement. ‘There are no efficiencies to be gained by combining different insurers who write different policies for different policyholders who are in different industries and made claims under different factual scenarios.'”

His comment was also picked up by the Insurance Journal for their coverage of the MDL decision.

A key consideration at hand in this decision is time. It will take months, if not years, to settle these cases in court. The plaintiffs in these cases are business owners in need of true relief that only the federal government can provide. The immense cost and great time spent litigating will only further harm business owners.

And as we’ve seen in most cases decided thus far, court decisions are likely to simply reaffirm that BI contracts are not designed to cover pandemics and necessitate a direct physical loss to property to be activated. 

You can read the Bloomberg Law article here and the Insurance Journal article here. For more information, please visit


New AAF Report And Senator Nelson On COVID-19 Business Relief, Road Ahead For Businesses

Earlier this week, the American Action Forum (AAF) held a virtual forum examining the COVID-19 policy responses and their successes and failures in providing relief for businesses during the pandemic. In a companion report, AAF Director of Financial Services Policy Thomas Wade dove into the state of play of financial support for businesses during this crisis

In his piece, Wade discusses several important topics, including the Federal Reserve’s emergency lending facilities, business interruption (BI) insurance, and protecting businesses from a new class of coronavirus litigation. 

Former Nebraska Governor and U.S. Senator Ben Nelson, a longtime insurance executive and regulator, said the following after the event: 

“The COVID-19 pandemic has brought unprecedented financial harm and uncertainty for businesses across the country. If COVID-19 has shown us anything is that global pandemics are uninsurable; only the federal government has the financial ability to provide business relief during this crisis. AAF’s report comes as a timely and crucial reminder that while some financial relief measures have been enacted, they have not done enough to support American business owners during this crisis. Now it’s time for Congress to come together to find a government-backed solution that brings much-needed relief for struggling businesses around the country.” 

Wade provides an important summary of the ongoing BI debate in his report, highlighting the implications of the absence of a federal backstop during a pandemic for insurers and businesses alike. 

  • Wade reiterates what insurers have been showing for months: only the government has the financial means to provide business relief during a crisis of this scope and magnitude. “Despite most insurance policies explicitly excluding viral risks, insurers face enormous pressure to pay business-interruption claims; a possible solution in the future is to create a federal reinsurance program with a backstop, allowing insurers to write pandemic-related policies.”
  • Additionally, he points out that without a federal solution, businesses are turning to litigation against insurers. Still, courts are overwhelmingly siding with insurance companies because contracts are clear. “The primary battleground for insurers are courts across the world; in the United States a growing number of courts appear to be finding in favor of insurers by noting the necessity of physical damage as a trigger to business interruption insurance.”
  • Wade also emphasizes, “Without further government aid, the temporary closure of hundreds of thousands of small businesses could be permanent by the time the national emergency is lifted.” He continues, “the government’s role must be to provide the financial relief required to keep businesses afloat and not choose winners or losers by vilifying certain industries, from insurers to landlords.”

For a full event recap, check out FAIR’s latest blog post. For more information on the ongoing BI debate, visit