b'Insurance Regulatory | US/NAIC | Insurance After the COVID-19 Pandemicgovernments attempt to reduce the economic risksinsurer deductible. There is a $750 billion program and consequences associated with pandemics andcap for federal compensation, and if losses exceed global health emergencies by restoring insurancethe cap, PRIA authorizes the Treasury Secretary to capacity to the marketplace. determine the pro-rata share of compensation PRIA would mandate that insurers that offer BIbeyond the cap. The Secretary would issue regula-insurance cover losses incurred due to pandemics ortions setting forth the pro-rata share determination global health emergencies. In exchange, PRIA wouldwithin 90 days of PRIA being enacted. PRIA would establish the Pandemic Risk Reinsurance Programnot prohibit insurers from purchasing reinsurance (PRRP) that would act as a federal backstop. Thecoverage in the private reinsurance markets, but PRRP would allow insurers and the federal govern- would prohibit double-dippingif a participating ment to share the responsibility to pay claims forinsurer is compensated for covered losses under covered losses and thereby share the risk of loss foranother federal program, federal coverage under future pandemics. PRIA would apply to any outbreakthe PRRP would be reduced by that amount. The of infectious disease or pandemic that occurs on orPRRP would sunset on December 31, 2027.after January 1, 2021 that (i) pursuant to the PublicUnder PRIA, the Secretary of the Treasury would have Health Service Act, leads to an emergency declara- the authority to issue interim final rules or procedures, tion; and (ii) is certified, by the US Secretary of Healthto prescribe regulations and to investigate and audit and Human Services, as a public health emergency.claims. The Secretary would also require participating The PRRP would be administered by the Treasury. insurers to submit information relating to insurance Under PRIA, an insurer that participates in the PRRPcoverage for BI resulting from pandemics or public would be required to cover pandemics and publichealth emergencies. Under PRIA, the Secretary would health emergencies under its BI policies (includingsubmit reports on an annual basis to Congress event cancellation policies). For participating insur- regarding the PRRP. PRIA would not affect the ers, any explicit policy exclusions for such losses thatjurisdiction or regulatory authority of the state exist prior to when PRIA is enacted would, with fewinsurance commissioners (or any agency or office exceptions, be void and the state form approvals ofperforming like functions) over any insurer or other the exclusions would be preempted.person except as explicitly provided.To reduce the exposure of participating insurers toIndustry Alternatives - The Business losses stemming from pandemics or other publicContinuity Protection Program health emergencies, federal assistance would beOn behalf of the insurance industry, the National provided through the PRRP. Insurer participation inAssociation of Mutual Insurance Companies, the PRRP would be voluntary and would need to beAmerican Property Casualty Insurance Association renewed annually. The PRRP would provide a systemand the Independent Insurance Agents & Brokers of for the sharing of BI/event cancellation losses. PRIAAmerica Inc. are advancing an alternative to PRIA provides that the PRRP will only be triggered when the Business Continuity Protection Program aggregate insured losses for a covered public health(BCPP). Originally introduced in May 2020, and emergency exceed $250 million. PRIA sets eachrevised in September 2020, the BCPP is designed to participating insurers deductible at 5% of the valuebolster the USs economic resilience by providing of the insurers direct earned premiums during thetimely and efficient financial protection to the preceding calendar year. Once the PRRP has beenprivate sector in the event of a future declared triggered, the federal share of compensation ispublic health emergency. The BCPP enables equal to 95% of insured losses that exceed the MAYER BROWN 71'