Hearing discusses future pandemic risk management
On November 19, 2020, the US House Committee on Financial Services Subcommittee on Housing, Community Development and Insurance held the virtual hearing, “Ensuring against a Pandemic: Challenges & Solutions for Policyholders & Insurers,” which focused on the role of the insurance industry and government-backed programs to assist small businesses in managing future pandemic risk. The discussion centered on a variety of proposed solutions and whether or not they should mirror existing insurance models such as the Pandemic Risk Insurance Act (PRIA), which is patterned after the Terrorism Risk Insurance Act (TRIA) or other new forms outside of the traditional insurance rubric – potentially resembling something like the Paycheck Protection Program through the Small Business Administration.
In his opening statement during the hearing, Chairman William Lacy Clay (MO-1) said, “It is not realistic or practical to expect the insurance industry to shoulder the astronomical cost of a global pandemic. The American Property and Casualty Insurance Association has estimated that paying all [COVID-19-related] claims, regardless of exclusions, would amount to $1 trillion per month.” He went on to compliment legislative action so far, but warned that any solution needs to have industry input because of the immensity of the problem at hand. Ranking member and Ohio Congress person Steve Stivers (OH-15), stated that both parties have to provide input to the solution and it is more important to get a solution “right” than to get it “fast.”
