The US has introduced the Pandemic Risk Insurance Act of 2020 to create a government-backstopped pandemic risk reinsurance programme (PRRP).
The Pandemic Risk Insurance Act (PRIA) would help protect the economy from losses arising from future pandemics, creating a system of shared public and private compensation for business interruption losses resulting from future pandemics or public health emergencies.
It would require insurance companies to include pandemic coverage in their business interruption insurance policies, while creating a pandemic risk reinsurance programme to ensure that there is sufficient capacity to cover losses that resulted from this coverage.
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.
The bill was introduced by Carolyn Maloney, a Democratic congresswoman from New York and a member of the House Financial Services Committee, along with a number of other stakeholders. If passed in its current form, the PRRP would run until the end of 2027.
Maloney said the exclusion of pandemic coverage from business interruption policies has left millions of businesses facing losses from which they may never recover. “These employers and their employees need to know that they will be protected from future pandemics, which is why I am introducing the Pandemic Risk Insurance Act,” she said.
Many companies and trade associations have thrown their support behind the PRIA initiative, including Marsh, the Council of Insurance Agents and Brokers and the Risk Management Society.
Chai Jindasurat, policy director at Nonprofit New York, an association of over 1,500 nonprofits, said: “Congresswoman Maloney’s PRIA is a proactive, market-friendly insurance solution to fund and cover future business losses that will create much-needed stability for our economy and our communities."
Tori Emerson Barnes, US Travel Association executive vice president for public affairs and policy noted the impact of COVID-19 has been nine times greater than 9/11 was on the travel industry, which justifies a pandemic equivalent of TRIA.
Pandemic Risk Insurance Act, PRIA, Terrorism Risk Insurance Act, TRIA, Carolyn Maloney