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Rep. Carolyn Maloney, D-New York, on Tuesday introduced a second iteration of the Pandemic Risk Insurance Act – legislation that would establish a federal backstop for pandemic risk.
H.R. 7011, the Pandemic Risk Insurance Act of 2021, would establish a pandemic risk reinsurance program, requiring insurers to offer pandemic risk coverage in all critical commercial lines of insurance, including business interruption and specialty lines such as event cancellation.
The legislation would establish a parametric program for non-damage business interruption losses. The parametric coverage would compensate businesses for a portion of 180 days’ fixed costs and payroll.
It would also provide for a pooling alternative for insurers that don’t want to directly write primary non-damage business interruption coverage.
“A forward-looking, public-private partnership like this, one supported by a federal backstop, will help businesses keep their employees on payroll and weather the storm that a public health emergency brings,” Rep. Maloney said in a statement.
The move was welcomed by the Washington-based Business Continuity Coalition which represents more than 50 policyholder groups and companies in various sectors, including risk management, hospitality, real estate, retail, film and television. It urged bipartisan support for the bill.
However, the insurance industry group the American Property Casualty Insurance Association said the legislation would add to the hardships facing many businesses as they continue to struggle to recover from the pandemic.
“The legislation would make the business interruption insurance that countless small businesses rely upon unaffordable or unavailable by forcing insurers to include an uninsurable risk in all business interruption policies,” Nat Wienecke, APCIA senior vice president, federal government relations, said in a statement.
“Global pandemic risk, and the resulting economic harm, cannot be insured by the private market,” Mr. Wienecke said.
Like the Terrorism Risk Insurance Act that was enacted after the 9/11 terrorist attacks, under PRIA 2021, the federal government would pick up 95% of losses arising from any future pandemic that results in a public health emergency.
However, unlike TRIA, there is no “insurer deductible,” nor would there be any post-event recoupment.
Covered lines under the program would include excess insurance, workers compensation, business interruption, commercial general liability insurance and directors and officers liability insurance.
Rep. Maloney first introduced PRIA legislation in May 2020 in response to the COVID-19 pandemic.
The Risk & Insurance Management Society Inc. Thursday announced its official support for the Pandemic Risk Insurance Act of 2020.