Carolyn Maloney, the Democrat Congresswoman from New York, has called on Congress to be proactive in helping businesses protect themselves from economic losses resulting from pandemics by enacting the Pandemic Risk Insurance Act (PRIA).
Maloney, who is a senior member of the House Financial Services Committee, introduced PRIA on May 26, 2020. It would create a framework for insurance companies to offer business interruption insurance policies that cover pandemics, with a reinsurance programme, backed by a federal backstop, to ensure capacity.
The Federal backstop would make sure that these business interruption policies are both widely available and affordable for small businesses, while maintaining marketplace stability.
At a roundtable event on September 10, attended by stakeholders from the small business community and the insurance industry, Maloney said: “There is broad consensus that we need a programme like the one created by PRIA to provide business owners and our economy with better stability in the event of any future pandemics.”
She added: “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.”
Robert Gordon, senior vice president, policy, research and international, American Property Casualty Insurance Association (APCIA), described PRIA as a “multilayered solution [that] would create a scaffold that the private market could potentially build on over time.”
Joe Wayland, executive vice president and General Counsel, Chubb Group, said the principle of ultimate government responsibility should be at the heart of an insurance programme to address losses for a future pandemic.
“It is essential to develop a programme now that will provide certainty about prompt relief to allow businesses, particularly small businesses, to keep their employees on the payroll and to pay rent and other expenses,” he said. “While the government must take on a lion’s share of the risk, we strongly believe that the private insurance industry can and should take on some of that risk.”
Susan Robertson, president and chief executive officer at the American Society of Association Executives (ASAE) said: “ASAE has called for a PRIA-like programme since March soon after our current crisis took hold. And, since late May, ASAE has proudly and actively supported your PRIA, which is essential to sustaining our community and so many others during this challenging time.”
Scott Sinder, chief legal counsel at the Council of Insurance Agents and Brokers (CIAB), said his member insurance agencies and brokerage firms annually sell or place approximately 90 percent – well over $300 billion – of all US commercial insurance products and services. Many of these members are struggling to deal with the economic challenges posed by the pandemic and the associated government ordered business shutdowns, he said.
“There was little to no insurance available pre-crisis to cover the associated economic losses,” said Sinder. “The strong consensus of the Council’s board is that we should work to ensure that – if there is a next time – there is a mechanism already in place to try to minimise such economic disruption and to compensate America’s businesses for the associated losses.”
Tarique Nageer, terrorism placement advisory and leader, property practice at Marsh & McLennan Companies, said: “The last several months have demonstrated that traditional insurance solutions — and the commercial insurance market — cannot fully provide businesses and others with the protection they need from the enormous costs of pandemics. Only the credit and power of the US government can help create the necessary risk programme to harness the financial and social benefits of insurance to mitigate pandemic related economic losses and provide greater certainty about a sustained recovery.”
The insurance industry also has a role to play, said Nageer. “If we create the right economic incentives for insurers, policyholders, and the government, insurance can serve its traditional function of mitigating risk,” he said. “A number of our partners in the insurance industry have put forth thoughtful proposals to address pandemic risk, and we look forward to collaborating on a solution.”
Carolyn Maloney, Pandemic Risk Insurance Act, PRIA, Robert Gordon, Joe Wayland, Scott Sinder, Tarique Nageer