Zach Finn, an insurance professor with Butler University, has argued that the federal backstop for terrorism should be expanded to include pandemic coverage.
Speaking in an interview with AMBestTV, Finn said that the Terrorism Risk Insurance Act (TRIA) in the US could be expanded retroactively to ease the economic impact caused by the coronavirus (COVID-19) outbreak.
“My proposal is not to re-create the wheel, but to liberalize TRIA to include the peril of pandemic,” he explained.
“Make that coverage retroactive to cover the COVID-19 losses. Go back to anybody who did not buy TRIA before and give that person a chance to retroactively purchase the coverage.”
“If you do that, then the Secretary of the Treasury could immediately declare a certified pandemic,” Finn continued. “We could start to adjust business interruption and event cancellation losses and turn the market for that coverage back on.”
According to Finn, at the core of the proposal is a mechanism to get “markets moving again,” as the economic losses caused by the virus continue to widen.
The US now has more confirmed cases of COVID-19 than any other country, with more than 85,500 positive tests.
But President Donald Trump has said the nation will get back to work “pretty quickly” and set a goal of April 12th for reopening the country.
This early deadline is likely motivated by the far-reaching economic impacts that the pandemic has already had in the US, as well as across the rest of the world.
But Finn says that expanding TRIA to account for losses caused by COVID-19 could help the US to alleviate some of the economic strain by directing pressure away from people and smaller businesses.
“Basically what I am proposing is that we need to get all this uncertainty off of American businesses and individuals’ balance sheets and use the insurance industry as a pass-through to get it into the TRIA mechanism,” he explained.
“Then, the government can go back and work with the industry to figure out if it needs to adjust the actual risk sharing … My proposal is just a more efficient way for the government to backstop the insurance industry so that this coverage can exist in the private marketplace.”