PRIA to Help Insurers in Future Pandemics

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COVID has created an unprecedented hardship on insurance companies. Many polices have had to be deferred or outright cancelled due to the crisis and many new polices going forward will have this virus excluded from their polices.

As it is, many insurers have had to cover losses due to interpretation of many of their clients that the lockdowns are now considered business interruption. This means the insures would be forced to pay up. In addition, many states are requesting that they refund or delay these premiums for up to two months and several states are requiring reporting for COVID related coverage.

As insurance companies recover from the massive losses, Congress is looking at legislation to help insurance companies in the future. The Pandemic Risk Insurance Act of 2020 or PRIA is designed to act like the Terrorism Risk Insurance Act or TRIA did after 9/11 only for certified Pandemics. Just like TRIA, the PRIA program would be administered by the U.S. Department of Treasury and would require participating insurance companies that offer business interruption insurance to make available insurance coverage for a “public health emergency,” which includes “any outbreak of infectious disease or pandemic” on terms that do not differ materially from the terms applicable to losses arising from other events. Like TRIA, PRIA would also subject participating insurers to individual and industry deductibles, and then such insurers would share with the U.S. federal government in losses up to certain thresholds.[1]

As the insurance world battles with losses associated with COVID, those who seek it should be prepared for increased rates and coverage exclusions. Discuss these matters with your carrier before activating your coverage.

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