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RIMS backs US pandemic cover bill

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The Risk and Insurance Management Society (RIMS) has backed a bill reintroduced into the US Congress to create Government-backed cover for pandemics following development of the proposal last year.

New York Congresswoman Carolyn Maloney last week introduced the Pandemic Risk Insurance Act 2021 (PRIA) to create a system of shared public and private compensation for business interruption losses resulting from pandemics or public health emergencies.

“As organisations continue to fight and rebound from the impacts of the global pandemic, it’s critical that business and government leaders come together to develop a real insurance solution to prevent future economic disruption,” RIMS President Ellen Dunkin said yesterday.

RIMS in June joined the Business Continuity Coalition, which is supporting the PRIA bill. The coalition includes the National Football League, The Walt Disney Company, the International Council of Shopping Centres, the American Hotel and Lodging Association and other groups.

“Risk professionals are well-positioned to provide a valuable perspective on insurance solutions that not only strengthen business resiliency but would allow our partners in the insurance industry to confidently deliver effective and affordable pandemic risk products,” Ms Dunkin said.

PRIA would require insurers to make cover available in property and casualty policies for losses due to “covered public health emergencies” such as pandemics.

Insurers would also be required to make available parametric non-damage business interruption cover in commercial property policies, providing compensation for up to 180 days’ fixed costs and payroll.

Under the bill, the Federal Government would serve as a backstop to maintain marketplace stability and to share the burden alongside private industry. The bill says the Federal share of compensation on a quota share basis would be equal to 95% of insured losses.

The American Hotel and Lodging Association says the legislation would help provide a necessary safety net.

“COVID-19 is the worst economic event in the history of the American lodging industry, and this bill would provide crucial protection for hotel employees and small business owners if our nation ever faces another pandemic,” CEO Chip Rogers said.

PRIA is modelled after the US Terrorism Risk Insurance Act (TRIA).