b'Insurance Regulatory | US/NAIC | Insurance After the COVID-19 PandemicThe BCPP would also establish a federal excessOther Industry Alternativesinsurance backstop to facilitate additional privateOther proposals have been proposed by the insurance insurer coverage for losses beyond what is coveredindustry. These industry proposals, among others, by the BCPPs revenue replacement assistanceinclude the Chubb Pandemic Business Interruption program. Participation in this program would beProgram, Zurichs Pandemic Risk Concept and the voluntary for both policyholders and insurers.Business Continuity Coalition recommendations for Businesses would need to first participate in thepandemic insurance solution. These proposals are also BCPP to purchase this excess product. An insurerbeing considered by federal law-makers, as they would pay claims directly to policyholders anddiscuss the best solution going forward.submit claims for reimbursement from the federal backstop. The federal co-share would be 90% andCongressional Activitythe insurer co-shares would be 10% of each calen-dar years losses. The co-share would not changePRIA has been referred to the US House Financial for the duration of the program. Duplicative com- Services Committee. Committee Chair Maxine pensation would be prohibited, but insurers wouldWaters included PRIA on a priority list of proposed be expressly permitted to purchase reinsurance tolegislative responses to COVID-19. A virtual hearing cover their retained risks.entitled, Insuring against a Pandemic: Challenges Although originally proposed to be run by FEMA,and Solutions for Policyholders and Insurers was the BCPP, as amended, would be run by theheld by the Subcommittee on Housing, Community Treasury. The Director of the BCPP would be respon- Development and Insurance on November 19, 2020. sible for the careful management of the BCPPsAt this hearing, possible legislation concerning a accrued assets year-over-year. In years withoutcollaboration between the public and private sectors losses, collected funds could be used to purchaseto insure against pandemic risks was discussed. Treasury securities, which would be credited underTestimony from witnesses reflected the views of key federal budget rules as program assets. Since thestakeholders in the area. These witnesses included BCPPs exposure in any loss year is likely to exceedAnn Cantrell, a policyholder and owner of Annies its available assets, the BCPP should be grantedBlue Ribbon General Store; Michelle McLaughlin, authority to borrow from the Treasury to pay allChief Underwriting Officer at Chubb; John Doyle, recorded losses. A final audit and accounting of allPresident and CEO of Marsh; Brian Kuhlmann, Senior BCPP funds is contemplated to be completedCorporate Counsel of Shelter Insurance Company; annually by the federal government. The Director ofand R.J. Lehmann, Senior Fellow at the International the BCPP will establish a post-event auditing processCenter for Law and Economics. During the hearing, for beneficiaries of the BCPP to ensure the validity ofnumerous witnesses recognized that any role that application attestations, and any entity found tothe insurance market plays in insuring pandemic risk have knowingly defrauded the BCPP would bewill be contingent on a clear limit of the industrys expelled and be subject to stringent penaltiesexposure through a federal backstop. It was further (including fines and jail time). The Director of thenoted that the insurance industry can leverage its BCPP would be granted clawback authority torisk-assessing expertise for the benefit of a properly require the return of benefits not applied to allow- structured federal program.able expense categories.MAYER BROWN 73'