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Property and Casualty Insurers Concerned about PRIA

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As COVID induced closures begin to ease, Congress has begun drafting legislation to help prevent losses in the future from illness related catastrophes.  The Pandemic Risk Insurance Act, or PRIA, is designed to work and act like the terrorism related TRIA.

Though PRIA is similar to TRIA, there are some differences in how to implement them. PRIA is a voluntary service in which participants must pay into the program. “Moreover, it also remains to be seen how broad PRIA’s “make available” requirement will extend if passed. TRIA requires that each insurer “shall make available, in all of its property and casualty insurance policies, coverage for insured losses…”  By contrast, the PRIA Discussion Draft is worded slightly differently and requires that each insurer shall “make available, in all of its business interruption insurance policies, coverage for insured losses…” (Emphasis added). Therefore, on its face, TRIA is significantly broader and mandates that terrorism coverage be provided in connection with any commercial property and casualty insurance policy. In contrast, PRIA may only require coverage for “covered public health emergencies” in connection with business interruption insurance policies, and only then for voluntarily-participating insurers.”[1]

However, not all insurance fields will follow this proposed plan. Many in the property and casualty field do agree that something like TRIA as a backstop is warranted. But they’re concerned at putting Pandemic coverage in the same vein as business interruption. Rather, groups like the American Property Casualty Insurance Association (APCIA) and the National Association of Mutual Insurance Companies, (NAMIC) believe they are already covered under programs like TRIA and the National Flood Insurance Program, which covers catastrophic risks. In addition, they believe that while a program is the right idea, it should be federally backed not as a stop gap.[2]

PRIA could be considered another game changer in the insurance market, much like COVID basically changed business. Coverages should be examined and modified as needed to comply with the new information.