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1 June 2020
Legislation to create a US Pandemic Risk Reinsurance Program, similar to arrangements in place for terrorism, has been introduced into the US Congress.
New York Democrat Carolyn Maloney says the legislation would require insurance companies to offer business interruption policies that cover pandemics while creating a reinsurance program to ensure sufficient capacity.
“Employers and their employees need to know that they will be protected from future pandemics,” she said.
Ms Maloney, who sits on the House Committee on Financial Services, says the US Government would provide a backstop to maintain marketplace stability and to share the burden under the proposed legislation, which is similar to the Terrorism Risk Insurance Act (TRIA).
The proposal has received support from broking giant Marsh &McLennan and the Risk and Insurance Management Society (RIMS).
But the National Association of Mutual Insurance Companies, the American Property Casualty Insurance Association (APCIA) and the Independent Insurance Agents and Brokers of America favour an alternative federal plan to help businesses.
The groups argue a TRIA-like program, with an industry financial role, does not square with the fundamental notion that pandemics are not insurable risks.
“We need a sustainable solution that provides simplicity, certainty and immediate relief to impacted businesses,” APCIA CEO David Sampson said.
The groups are promoting a Business Continuity Protection Program (BCPP) that would be administered through the Federal Emergency Management Agency.
Businesses would purchase a designated level of revenue replacement assistance from the BCPP, with relief automatically triggered following a federally declared public health emergency.