Draft legislation that would create a federal backstop scheme for pandemic risk is circulating among lawmakers on Capitol Hill, Insurance Insider can reveal.
An early version of the proposed Pandemic Risk Insurance Act (Pria) was distributed this week by the office of Congresswoman Carolyn Maloney, a Democrat from New York, according to sources.
News of the concrete legislative proposal comes after this publication earlier revealed talks between the industry and US lawmakers over the creation of such a scheme.
A copy of the draft reviewed by this publication indicates the scheme would be voluntary for carriers and that participants would be compelled to provide detailed data on their exposure to business interruption losses.
Under the proposal, participants would also have to nullify some existing BI exclusions and lawmakers would be given powers to extend the scheme to captives and self-insurance arrangements.
The trigger point for the programme would be $250mn, meaning that no compensation for insurers would be authorised until a public health emergency is declared and aggregated insured losses from participating carriers hit that quantum.
The government’s maximum annual liability would be capped at $500bn.
Multiple versions of the bill are understood to be circulating among lawmakers and revisions are currently being made. Some of the provisions may change.
Industry sources in Washington urged caution over the speed at which the proposals were progressing and said time was needed to scrutinize the proposals and understand the long-term implications for the industry.
“This legislation is entirely prospective. It will do nothing to address the devastating impacts of Covid-19 that our policyholders are facing right now,” one source said.
A legal source specialising in insurance coverage disputes also urged greater scrutiny of the 39-page bill and said the industry needed more time to look deeply at the proposed legislation.
“This is moving very fast and I have a number of concerns, including whether or not aspects of this legislation may conflict with states’ powers to arbitrate disputes,” the source said.
The proposed bill follows an earlier policy briefing distributed to select lawmakers and industry representatives by the office of Congresswoman Maxine Waters, a California Democrat who chairs the House financial services committee.
A spokesperson for Representative Maloney declined to comment. The office of Representative Waters did not immediately respond to a request for comment.