Representative Carolyn Maloney (NY) recently announced the reintroduction of the Pandemic Risk Insurance Act. The first version of this proposal, introduced in May 2020, largely borrowed from the Terrorism Risk Insurance Act.

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Pandemic Risk Insurance Act of 2021
HR 5823

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Pandemic Risk Insurance Act of 2021
The Players
U.S. Treasury administers the Pandemic Risk Reinsurance Program. The Secretary has the nondelegable, non-reviewable authority to certify an
HHS declared public health emergency as covered by the Program. The program terminates December 31, 2031.
Commercial property and casualty insurers licensed in any state (including U.S. domiciled captive insurers), non-U.S. insurers included in the
NAIC’s Quarterly Listing of Alien Insurers, certain federally approved insurers, and state residual market entities are subject to the program.
U.S. Department of Health & Human Services determines whether a public health emergency exists due to a significant outbreak of infectious
disease under existing law.
Individual state insurance commissioners supervise insurers in the normal course (with limited exceptions during a transitional period) and
supervise newly created parametric insurance facilities.

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Pandemic Risk Insurance Act of 2021
Make Available Requirement
Initial Offer of Property and Casualty Insurance
A
Every insurer must make its commercial property and casualty* insurance policies available without an exclusion or limitation specific to a certified pandemic or infectious
disease outbreak. If the policyholder rejects that offer, the participating insurer may offer a policy with such an exclusion or limitation.
B Every insurer must also make its commercial property** insurance policies available with parametric non-damage business interruption coverage either within the policy
or through a separate policy issued by a parametric insurance facility.
* The offer of a policy without an exclusion or limitation applies to all lines of commercial property and casualty insurance (e.g., property, liability, and workers compensation) but excludes crop insurance, private
mortgage insurance, financial guaranty insurance, life and health insurance, flood insurance, reinsurance, personal lines insurance, automobile insurance, burglary and theft insurance and surety.
** The offer of parametric non-damage business interruption insurance must be made when the insurer offers indemnity-based commercial property insurance covering the interests of an owner or user in the
income-producing ability of property at a fixed location or premises (excluding inland marine and transit insurance).
*** To be covered under the program, losses must occur in the United States during the period that a covered public health emergency is in effect for the relevant area.
Cannot exclude or limit coverage because a loss relates
to a certified pandemic or infectious disease outbreak
Parametric non-damage business interruption coverage pays out when a state or local government issues a closure order based
on a certified covered health emergency applicable to the insured’s NAICS code. The coverage pays a portion of 180 days of the
insured’s fixed costs and payroll without the need of the insured to prove physical loss, inability to use the location or actual loss.

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Pandemic Risk Insurance Act of 2021
Parametric Insurance Facilities
U.S. Treasury is responsible to issue regulations establishing eligibility criteria and standards for the establishment and operation of
parametric insurance facilities.
Individual state insurance commissioners supervise parametric insurance facilities domiciled in their respective states. A facility
domiciled in one state may provide coverage in all states.
Insurers that elect to participate in a facility make capital contributions to the facility and, after five years without a certified pandemic
or infectious disease outbreak, may receive a distribution of profits. Insurers are not subject to assessments for losses of the facility.
An insurer may satisfy its obligation to offer parametric non-damage business interruption coverage by participating in a parametric insurance facility.

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Pandemic Risk Insurance Act of 2021
Federal Backstop
U.S. Treasury is responsible to fund 95% of insured losses paid by insurers and parametric insurance facilities.
U.S. Treasury may also offer insurers and parametric facilities stop-loss protection contracts.
Insurers and parametric insurance facilities will pay no premium for the federal share for the first five years of the
program and for five years after a future certified pandemic or infectious disease outbreak. When a premium is
charged, the plan should be designed recover the cost of the program within a period of five years.

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Pandemic Risk Insurance Act of 2021
Transition Period
Existing Pandemic Exclusions Voided
Upon enactment of the Program, exclusions that would be applicable to a certified pandemic or infection disease outbreak in existing policies (and state insurance
commissioner approvals of those exclusions) become void.
The insurer can reinstate such an exclusion in a policy that has been in effect for less than five months if the insurer gives the policyholder:
• 30 days written notice of reinstatement; and
• The option to pay an additional premium (not to exceed 15% of the policy premium) in lieu of reinstatement.
Federal File and Use Right
Upon enactment of the Program through the end of 2021, rates and forms related to implementation of the program may be implemented by insurers on a file and use basis.
Disclosure Requirements
In order to recover the federal share, an insurer must have provided the policyholder at the time of offer and renewal clear and conspicuous disclosure of the premium charged
related to the coverage required to be made available under the program and information about the federal share of losses. During the first 90 days after enactment, the
insurer may send the notice separately to existing and new policyholders.