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The Risk & Insurance Management Society Inc. Thursday announced its official support for the Pandemic Risk Insurance Act of 2020.
RIMS’ endorsement of the PRIA legislation — H.R. 7011, introduced by Rep. Carolyn Maloney, D-N.Y., in May — follows a report released Tuesday by Marsh LLC that reiterated its view that a public-private pandemic risk insurance program is needed.
Three major insurance groups are instead pushing for an alternative pandemic backstop called the Business Continuity Protection Program that would provide federal payments to businesses incurring income losses due to a national pandemic.
In a statement RIMS said the proposed PRIA legislation will create a federal program that offers a “transparent system of shared public and private compensation for business interruption losses resulting from a pandemic or outbreak of communicable disease.”
The creation of a pandemic risk reinsurance program within the Treasury Department will also create a “realistic market for pandemic insurance,” RIMS said.
In a report Tuesday, John Doyle, CEO of Marsh LLC, said a public-private pandemic risk insurance program is “essential” for large and small organizations to accelerate economic recovery and to protect against future pandemic risks.
“Only the credit and power of the U.S. government can help create the necessary risk program to harness the financial and social benefits of insurance to mitigate pandemic-related economic losses and provide greater certainty about a sustained recovery,” Mr. Doyle said in the report.
But the insurance industry has a role to play, too, he said.
“If we create the right economic incentives for insurers, policyholders and the government, insurance can serve its traditional function of mitigating risk,” Mr. Doyle said.
Both RIMS and Marsh have urged Congress to take “swift” legislative action on the matter.
“PRIA is crucially important to the road to economic recovery, especially as businesses examine both the short- and long-term impacts of COVID-19 on business strategies,” RIMS CEO Mary Roth said in a statement.
Some 91% of risk managers polled by RIMS support a federal loss-sharing program for insurance claims related to pandemic losses, modeled on the Terrorism Risk Insurance Act enacted after the 9/11 terrorist attacks.
More insurance and risk management news on the coronavirus crisis here.