New York Congresswoman Carolyn Maloney reintroduced the Pandemic Risk Insurance Act of 2021 (PRIA) on November 2nd, paving way for the creation of the Pandemic Risk Reinsurance Program, designed to protect businesses of all shapes and sizes from the impacts of future pandemics.
Rep. Maloney, alongside various stakeholders, first introduced PRIA in May of last year as the COVID-19 pandemic had pushed much of the world into lockdown, forcing the closure of businesses across all industries.
The legislation has now been reintroduced as Congress looks to create a system of shared public and private compensation for business interruption (BI) losses resulting from future pandemics or public health emergencies.
Under the terms of PRIA, insurance companies would be required to make available in all of their property and casualty insurance policies coverage for insured loss as a result of covered public health emergencies.
Furthermore, insurers would also be required to make available parametric non-damage BI coverage in their commercial property insurance policies, or else arrange for cover through an affiliate or a parametric insurance facility. This type of cover must include compensation for up to 180 days’ fixed costs and payroll for covered public health emergencies.
The creation of the Pandemic Risk Reinsurance Program ensures the availability of sufficient capacity to cover these losses and protect the U.S. economy in the event of a COVID-19 resurgence or future pandemics.
Under the bill, the federal government would serve as a backstop in order to maintain market stability and to share the burden with the private industry. The new legislation will see the federal government share in the losses incurred by paying 95% of such insured losses.
Rep. Maloney commented: “There is broad consensus that we need a program like the one created by PRIA – to provide business owners and our economy with better stability in the event of any future pandemics.
“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. Congress needs to be proactive in helping businesses protect themselves from economic losses because of pandemics, which we have seen can be devastating to businesses of all sizes — from the mom-and-pop grocery down the street to larger businesses.”
PRIA is endorsed by numerous of authorities and organisations in the U.S., including the Business Continuity Coalition (BCC); American Hotel & Lodging Association (AHLA); American Society of Association Executives (ASAE); and the Building Owners and Managers Association (BOMA) International, and many others.
The Business Continuity Coalition said: “The Business Continuity Coalition (BCC) – a multi-industry policyholder group representing 50 industries and companies advocating for a program to keep jobs and businesses protected in future pandemics – commends the leadership of Representative Maloney, and supports the introduction of the Pandemic Risk Insurance Act of 2021.
“The insurance market disruption that has resulted from the current pandemic requires a public-private partnership to ensure that our economy is properly protected against pandemic risk going forward. PRIA would create a federal backstop that ensures the availability of pandemic risk coverage in all critical commercial lines of insurance, helping the country prepare and respond to any future government-imposed shutdowns of the economy caused by pandemics. The BCC urges strong bipartisan support for this critical issue.”
Andrew Rigie, Executive Director of NYC Hospitality Alliance, added: “New York City’s restaurants, bars and nightclubs were devastated by the COVID-19 pandemic, and the failure of their insurers to pay business interruption insurance claims compounded the economic crisis for small business owners.
“That’s why, we commend Congresswoman Maloney and strongly support her Pandemic Risk Insurance Act to ensure that if the hospitality industry ever faces another pandemic crisis, their insurance policies will pay their claims, which will support their survival, livelihoods, preserve jobs and help sustain the economy.”