U.S. House Representative Carolyn Maloney introduced a 2021 version of the Pandemic Risk Insurance Act (PRIA) this week, which would require insurance companies to provide coverage for their business clients in the event of another public health emergency like a pandemic. In return, the government will cover 95% of pandemic-related insurance claims.
A former version of this bill was introduced to the 116th Congress in May 2020.
This legislation would only go into effect during another pandemic-like health emergency and does not apply to current COVID-19-related insurance claims. Currently, with no protection for either the insured or insurers in the books, business lawsuits against insurers for business interruption claims have been stopped in court. The most recent, K.C. Hopps v. Cincinnati Insurance Co. Inc. was the first business interruption claims case to go before a jury but was defeated in court on Oct. 28.
“The restaurant industry faced business interruption injuries they couldn’t even begin to imagine during the pandemic and have been devastated as their insurance claims were denied,” Shannon Meade, vice president, public policy and legal advocacy for the National Restaurant Association said in a statement. “Today, they are struggling to find insurers willing to continue that coverage. For industries across the country struggling to rebuild, the public-private pandemic risk insurance program this bill creates is essential to creating the web of insurance that will indemnify them against pandemic risk now and in the future.”
As part of the legislation, which has been compared to Terrorism Risk Insurance Act passed after the attacks of 9/11, would not include an “insurer deductible” or post-event recoupment. The program would protect insurers and the insured in the instance of non-damage business interruption claims.
Here’s how it would work: the business that suffered the loss from a federal government-identified public health emergency would file a claim with its insurer. The insurer would disclose the details of the coverage provided by the federal program, processes the claim and sends it to the U.S. Health Secretary.
PRIA would also allow processing of claims for unforeseen circumstances like event cancellation, film and TV production insurance, and liability coverage for essential services.
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