The US has introduced the Pandemic Risk Insurance Act of 2020 (PRIA), which aims to cover losses and protect the US economy in anticipation of a resurgence of COVID-19 and future pandemics.
The new legislation would create the Pandemic Risk Reinsurance Programme, which will be a federal programme that provides for a transparent system of shared public and private compensation for business interruption losses resulting from future pandemics or public health emergencies.
The bill was introduced by Carolyn Maloney, US representative for New York's 12th congressional district and a senior member of the House Financial Services Committee, alongside several stakeholders.
Maloney suggested PRIA would be “an important step in Congress’ prevention efforts against economic losses from future pandemics”.
PRIA will protect consumers by addressing market disruptions and ensuring the continued widespread availability and affordability of business interruption coverage for losses resulting from a pandemic or outbreak of communicative disease.
It also aims to allow for a transitional period for the private markets to stabilise, resume pricing of such insurance, and build capacity to absorb any future losses while preserving state insurance regulation and consumer protections.
Like the Terrorism Risk Insurance Act (TRIA), the federal government would serve as a backstop to maintain marketplace stability and to share the burden alongside private industry.
Commenting on the bill, Maloney said: “Millions of small businesses, nonprofits, mom-and-pop shops, retailers, and other businesses are being left out in [the] cold and will never be able to financially recover from the coronavirus crisis because their businesses interruption insurance excludes pandemics.”
“We cannot allow this to happen again. These employers and their employees need to know that they will be protected from future pandemics, which is why I am introducing the PRIA,” she added.
PRIA has been endorsed by organisations including Marsh & McLennan Companies; RIMS, the Risk Management Society; and The Council of Insurance Agents & Brokers, among many others.
Susan Robertson, president and CEO, American Society of Association Executives, said: “The PRIA offers a critical solution for associations and others devastated by event cancellations, slashed reserves and sharp membership declines amid COVID-19.”
Leon Buck, National Retail Federation vice president for government relations, banking and financial services, added: “Congress must take swift action and begin contemplating a solution to provide all businesses protection against future pandemic risks.”
In March, Zach Finn, director of the Davey risk management and insurance programme at Butler University, urged the US Congress and Senate to create a PRIA or to amend TRIA.
Finn asked the US federal government to “immediately amend TRIA to retroactively cover pandemics, quarantine, etc.”.
He suggested that the US Government create a risk pool that’s “fair, organised and underwritten”, adding that “we need the government to be the bank with other’s premiums, not necessarily taxpayer money”.
“If coverage is not retroactive there will be years of claims litigation and it will only be a matter of time until a legislature or court invalidates coverage exclusions and destabilised insurance markets”, Finn added.