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.
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.
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