During this national crisis, PIA National supports efforts to assist its members and the small business community with policy proposals that will best help them to maintain liquidity and, ultimately, solvency during these tumultuous economic times. To that end, in April, we released a three-point plan on policy proposals to assist business owners immediately during this crisis and in the future. We have continued to advocate for improvements to the Paycheck Protection Program (PPP) in the CARES Act, which we view as the first step, and, as the second step, we’re advocating for the creation of a COVID-19 Recovery Fund to further assist businesses struggling due to the shutdowns that have been mandated throughout the country.
The third step of our approach is to create a system of protections for businesses against possible future pandemic-related losses. PIA National supports many of the provisions included in the Pandemic Risk Insurance Act (PRIA), a bill introduced by Rep. Carolyn Maloney (D-NY). PRIA (H.R. 7011) is intended to provide businesses with aid businesses can count on in a future pandemic, with a goal of making business interruption (BI) coverage for pandemics available and affordable.
The bill, which would not be retroactive, would begin on January 1, 2021 and try to create a market for pandemic insurance the same way terrorism risk insurance was made available after the attacks of Sept. 11, 2001. The drafters used the terrorism risk insurance program as a model; PRIA would permit insurers to voluntarily opt into a program whereby any BI provision offered by the participating carrier would include pandemic coverage, in exchange for the government covering 95% of losses incurred by a covered event (where “covered event” is defined as an outbreak of infectious disease or pandemic identified as a public health emergency according to the Secretary of Health and Human Services).
The Treasury Department would pay 95% of aggregate covered losses once those losses reach $250 million. The government coverage would be capped at $750 billion in losses per year. The program would be voluntary, but insurers that offer BI coverage would be required to include the risk of pandemics if they chose to participate. Insurers that chose not to participate would retain the option of a pandemic or virus exclusion in any BI coverage they offered.
This bill is a step in the right direction, and PIA National supports many of its current provisions. However, we have not endorsed it at this time and will continue to advocate for improvements to the bill throughout the legislative process, such as increasing the federal share of losses. In addition, PIA National will oppose any attempt to make the program retroactive or mandatory, nor would we support any involvement in the program of the Federal Insurance Office, which we believe should be abolished.
Other proposals are also under development, like one ostensibly inspired by the National Flood Insurance Program (NFIP). This proposal is not yet introduced, and many of its details remain unclear. It would operate, like the NFIP, within the Federal Emergency Management Agency (FEMA). Participating businesses would pay into the program, and, in the event of a public health emergency, said businesses would receive payments that would cover up to 80 percent of their payroll and other expenses for three months. The federal government would pay for most of the losses.
PIA National will continue to work on developing proposals to guard against future pandemics; many options may provide possible solutions. As proposals are developed to address future pandemics, PIA National will remain open to viable solutions for addressing the complex challenges that lie ahead.