Rep. Carolyn B. Maloney, a senior member of the House Financial Services Committee and a former chairwoman of one of its subcommittees, is preparing to introduce legislation that would establish an insurance program to provide coverage during future outbreaks, closing a gap in current policies that exclude events like the COVID-19 pandemic.
According to a discussion draft circulated by the staff for Maloney, D-N.Y., and provided to CQ Roll Call, the program would operate similarly in some ways to the federal Terrorism Risk Insurance Program established after the 9/11 attacks. Terrorism risk insurance allows the government and the private sector to share the cost of events deemed to be terrorist attacks.
An email from Jake Friedman, Maloney's legislative assistant, forwarded to CQ Roll Call said the pandemic risk bill is expected to be introduced by the end of next week. The staff for Maloney didn’t respond to a request for comment.
Maloney led the Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets until she left in late 2019 to become chairwoman of the House Oversight and Reform Committee.
The Financial Services Committee would have jurisdiction. The House Small Business Committee, which has scheduled a hearing on May 21 to explore business interruption insurance coverage, may also have jurisdiction.
The proposal would be a “system of shared public and private compensation for business interruption losses resulting from a pandemic or outbreak of communicable disease,” according to the draft. The government’s liability would be capped at $750 billion annually, higher than the terrorism program’s $100 billion cap. An earlier draft seen by CQ Roll Call put the cap at $500 billion.
Unlike the terrorism risk coverage, which insurers must provide, the pandemic risk program would be voluntary, according to the draft.
Tom Glassic, an insurance public policy consultant and previously a senior insurance counsel to former Democratic Rep. Barney Frank of Massachusetts, said the voluntary element would make it like the National Flood Insurance Program, which allows insurance companies to decide whether to participate.
It is unclear whether the proposal could apply to COVID-19 if there is a new public health emergency declared during a potential second wave of the disease, Glassic said.
The idea is drawing opposition already.
Jon Bergner, the National Association of Mutual Insurance Companies’ vice president of public policy and federal affairs, said in a statement Thursday that it “is not the right solution for the nation’s businesses and non-profits or their employees.”
“The losses from conventional terrorism versus pandemics are of a fundamentally different nature and scope,” Bergner said. He added that the pandemic program model “attempts to utilize the complex and specific business interruption insurance product — with all of its physical damage requirements, numerous exclusions, time period limitations, negotiated caps on payment, and claims adjustment procedures — as the vehicle to preserve the entire US economy.”
NAMIC hopes to work on a solution, with Congress and the Trump administration, “through a federal program for pandemic losses that would provide direct revenue replacement assistance immediately during the next inevitable crisis,” Bergner said.
NAMIC and other groups representing insurance industries recently called for a federal business continuity fund in light of the COVID-19 pandemic. The fund would be backed by the federal government and operate under a special federal administrator’s authority, according to a March 31 letter.
“We’re in ongoing, positive talks with Members of Congress about the dire need for America’s Recovery Fund,” Sabrina Siddiqui, spokesperson for the coalition, told CQ Roll Call in a statement on May 5. “All around the country, businesses need help, they need access to capital, and they need it right now.”