Pandemic Risk Insurance Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 6983 To establish a Pandemic Risk Reinsurance Program, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 22, 2020 Mrs. CAROLYN B. MALONEY of New York (for herself, Mr. THOMPSON of California, Ms. NORTON, Ms. DELAURO, Ms. JACKSON LEE, Ms. PIN- GREE, Mr. COURTNEY, Mr. ROSE of New York, Mr. CISNEROS, Mr. GON- ZALEZ of Texas, Ms. PORTER, Mr. TED LIEU of California, Miss RICE of New York, Mr. GREEN of Texas, Mr. MORELLE, Mr. MEEKS, Ms. WILD, Mr. RYAN, Ms. TITUS, Ms. MENG, and Mr. DANNY K. DAVIS of Illinois) introduced the following bill; which was referred to the Com- mittee on Financial Services A BILL To establish a Pandemic Risk Reinsurance Program, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Pandemic Risk Insur- 4 ance Act of 2020’’. 5 SEC. 2. PURPOSE. 6 The purpose of this Act is to establish a Federal pro- 7 gram that provides for a transparent system of shared 8 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 6983 IH public and private compensation for business interruption 1 losses resulting from a pandemic or outbreak of commu- 2 nicable disease, in order to— 3 (1) protect consumers by addressing market 4 disruptions and ensure the continued widespread 5 availability and affordability of business interruption 6 coverage for losses resulting from a pandemic or 7 outbreak of communicative disease; and 8 (2) allow for a transitional period for the pri- 9 vate markets to stabilize, resume pricing of such in- 10 surance, and build capacity to absorb any future 11 losses, while preserving State insurance regulation 12 and consumer protections. 13 SEC. 3. DEFINITIONS. 14 In this Act, the following definitions shall apply: 15 (1) COVERED PUBLIC HEALTH EMERGENCY.— 16 (A) IN GENERAL.—The term ‘‘covered 17 public health emergency’’ means any outbreak 18 of infectious disease or pandemic— 19 (i) for which an emergency is de- 20 clared, on or after January 1, 2021, under 21 the Public Health Service Act; and 22 (ii) that is certified by the Secretary 23 of Health and Human Services, as a public 24 health emergency. 25 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 6983 IH (B) NONDELEGATION.—The Secretary 1 may not delegate or designate to any other offi- 2 cer, employee, or person, any determination 3 under this paragraph of whether, during the ef- 4 fective period of the Program, a covered public 5 health emergency has occurred. 6 (2) AFFILIATE.—The term ‘‘affiliate’’ means, 7 with respect to an participating insurer, any entity 8 that controls, is controlled by, or is under common 9 control with the insurer. 10 (3) BUSINESS INTERRUPTION INSURANCE.— 11 The term ‘‘business interruption insurance’’ means 12 commercial lines of property and casualty insurance 13 coverage, including event cancellation insurance or 14 other non-property contingent business interruption 15 insurance, provided or made available for losses re- 16 sulting from periods of suspended business oper- 17 ations, including losses from a covered public health 18 emergency, or a civil order related to a covered pub- 19 lic health emergency, whether provided under broad- 20 er coverage for property and casualty losses or sepa- 21 rately. 22 (4) CONTROL.— 23 (A) IN GENERAL.—An entity has ‘‘control’’ 24 over another entity, if— 25 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 6983 IH (i) the entity directly or indirectly or 1 acting through 1 or more other persons 2 owns, controls, or has power to vote 25 3 percent or more of any class of voting se- 4 curities of the other entity; 5 (ii) the entity controls in any manner 6 the election of a majority of the directors 7 or trustees of the other entity; or 8 (iii) the Secretary determines, after 9 notice and opportunity for hearing, that 10 the entity directly or indirectly exercises a 11 controlling influence over the management 12 or policies of the other entity. 13 (B) RULE OF CONSTRUCTION.—An entity, 14 including any affiliate thereof, does not have 15 ‘‘control’’ over another entity, if, as of the date 16 of enactment of the Act, the entity is acting as 17 an attorney-in-fact, as defined by the Secretary, 18 for the other entity and such other entity is a 19 reciprocal insurer, provided that the entity is 20 not, for reasons other than the attorney-in-fact 21 relationship, defined as having ‘‘control’’ under 22 subparagraph (A). 23 (5) DIRECT EARNED PREMIUM.—The term ‘‘di- 24 rect earned premium’’ means a direct earned pre- 25 VerDate Sep 11 2014 19:26 Jun 18, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 6983 IH mium for property and casualty insurance issued by 1 any participating insurer for insurance against 2 losses occurring in the United States. 3 (6) EVENT.—The term ‘‘event’’ means a trade 4 show, consumer show, exhibition, fair, conference, 5 convention, meeting, seminar, charity event, auction, 6 gala dinner, competition, sporting event, or other 7 similar event. 8 (7) EVENT CANCELLATION INSURANCE.—The 9 term ‘‘event cancellation insurance’’ means insur- 10 ance that indemnifies an insured for losses that 11 occur as a consequence of— 12 (A) cancellation, abandonment, or resched- 13 uling of an event; or 14 (B) non-appearance at an event of a prin- 15 cipal speaker. 16 (8) INSURED LOSS.—The term ‘‘insured loss’’ 17 means any loss resulting from a covered public 18 health emergency that is covered by primary or ex- 19 cess business interruption insurance issued by a par- 20 ticipating insurer if such loss occurs— 21 (A) within the United States; and 22 (B) during the period that the covered 23 public health emergency for such area is in ef- 24 fect. 25 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 6983 IH (9) INSURER.—The term ‘‘insurer’’ means any 1 entity, including any affiliate thereof— 2 (A) that is— 3 (i) licensed or admitted to engage in 4 the business of providing primary or excess 5 insurance in any State; 6 (ii) not licensed or admitted as de- 7 scribed in clause (i), if it is an eligible sur- 8 plus line carrier listed on the Quarterly 9 Listing of Alien Insurers of the NAIC, or 10 any successor thereto; 11 (iii) approved for the purpose of offer- 12 ing property and casualty insurance by a 13 Federal agency in connection with mari- 14 time, energy, or aviation activity; 15 (iv) a State residual market insurance 16 entity or State workers’ compensation 17 fund; or 18 (v) any other entity described in sec- 19 tion 4(f), to the extent provided in the 20 rules of the Secretary issued under section 21 4(f); 22 (B) that receives direct earned premiums 23 for any type of commercial property and cas- 24 ualty insurance coverage, other than in the case 25 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 6983 IH of entities described in subsections (d) and (f) 1 of section 4; and 2 (C) that meets any other criteria that the 3 Secretary may reasonably prescribe. 4 Such term includes captive insurers and other self- 5 insurance arrangements by municipalities and other 6 entities (such as workers’ compensation self-insur- 7 ance programs and State workers’ compensation re- 8 insurance pools). 9 (10) INSURER DEDUCTIBLE.—The term ‘‘in- 10 surer deductible’’ means, with respect to a partici- 11 pating insurer— 12 (A) the value of the participating insurer’s 13 direct earned premiums during the immediately 14 preceding calendar year, multiplied by 5 per- 15 cent; and 16 (B) notwithstanding subparagraph (A), for 17 any calendar year, if a participating insurer has 18 not had a full year of operations during the cal- 19 endar year immediately preceding such calendar 20 year, such portion of the direct earned pre- 21 miums of the participating insurer as the Sec- 22 retary determines appropriate, subject to appro- 23 priate methodologies established by the Sec- 24 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 6983 IH retary for measuring such direct earned pre- 1 miums. 2 (11) NAIC.—The term ‘‘NAIC’’ means the Na- 3 tional Association of Insurance Commissioners. 4 (12) PARTICIPATING INSURER.—The term 5 ‘‘participating insurer’’ means, with respect to a cal- 6 endar year, an insurer that has elected pursuant to 7 section 4(a)(3) to participate in the Pandemic Risk 8 Reinsurance Program under this Act for such cal- 9 endar year. 10 (13) PERSON.—The term ‘‘person’’ means any 11 individual, business or nonprofit entity (including 12 those organized in the form of a partnership, limited 13 liability company, corporation, or association), trust 14 or estate, or a State or political subdivision of a 15 State or other governmental unit. 16 (14) PROGRAM.—The term ‘‘Program’’ means 17 the Pandemic Risk Reinsurance Program established 18 by this Act. 19 (15) PROPERTY AND CASUALTY INSURANCE.— 20 The term ‘‘property and casualty insurance’’— 21 (A) means commercial lines of property 22 and casualty insurance, including excess insur- 23 ance, workers’ compensation insurance, and 24 event cancellation insurance; and 25 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 6983 IH (B) does not include— 1 (i) Federal crop insurance issued or 2 reinsured under the Federal Crop Insur- 3 ance Act (7 U.S.C. 1501 et seq.), or any 4 other type of crop or livestock insurance 5 that is privately issued or reinsured; 6 (ii) private mortgage insurance (as 7 such term is defined in section 2 of the 8 Homeowners Protection Act of 1998 (12 9 U.S.C. 4901)) or title insurance; 10 (iii) financial guaranty insurance 11 issued by monoline financial guaranty in- 12 surance corporations; 13 (iv) insurance for medical malpractice; 14 (v) health or life insurance, including 15 group life insurance; 16 (vi) flood insurance provided under 17 the National Flood Insurance Act of 1968 18 (42 U.S.C. 4001 et seq.); 19 (vii) reinsurance or retrocessional re- 20 insurance; 21 (viii) commercial automobile insur- 22 ance; 23 (ix) burglary and theft insurance; 24 (x) surety insurance; 25 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 6983 IH (xi) professional liability insurance; or 1 (xii) farm owners multiple peril insur- 2 ance. 3 (16) SECRETARY.—The term ‘‘Secretary’’ 4 means the Secretary of the Treasury. 5 (17) STATE.—The term ‘‘State’’ means any 6 State of the United States, the District of Columbia, 7 the Commonwealth of Puerto Rico, the Common- 8 wealth of the Northern Mariana Islands, American 9 Samoa, Guam, each of the United States Virgin Is- 10 lands, and any territory or possession of the United 11 States. 12 (18) UNITED STATES.—The term ‘‘United 13 States’’ means the several States. 14 (19) RULE OF CONSTRUCTION FOR DATES.— 15 With respect to any reference to a date in this Act, 16 such day shall be construed— 17 (A) to begin at 12:01 a.m. on that date; 18 and 19 (B) to end at midnight on that date. 20 SEC. 4. PANDEMIC RISK REINSURANCE PROGRAM. 21 (a) ESTABLISHMENT OF PROGRAM.— 22 (1) IN GENERAL.—There is established in the 23 Department of the Treasury the Pandemic Risk Re- 24 insurance Program. 25 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 6983 IH (2) AUTHORITY OF THE SECRETARY.—Notwith- 1 standing any other provision of State or Federal 2 law, the Secretary shall administer the Program, 3 and shall pay the Federal share of compensation for 4 insured losses in accordance with subsection (e). 5 (3) VOLUNTARY PARTICIPATION.— 6 (A) ELIGIBILITY.—Each entity that meets 7 the definition of an insurer under this Act may 8 participate in the Program. 9 (B) ELECTION.—The Secretary shall pro- 10 vide a process by which insurers may elect to 11 participate in the Program, with respect to a 12 calendar year. 13 (4) TREATMENT OF EXISTING POLICIES.—This 14 Act may not be construed to affect any policy for 15 business interruption insurance in force on the date 16 of the enactment of this Act. 17 (b) CONDITIONS FOR FEDERAL PAYMENTS.—No 18 payment may be made by the Secretary under this section 19 with respect to an insured loss that is covered by a partici- 20 pating insurer, unless— 21 (1) the person that suffers the insured loss, or 22 a person acting on behalf of that person, files a 23 claim with the participating insurer; 24 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 6983 IH (2) the participating insurer provides clear and 1 conspicuous disclosure to the policyholder of the pre- 2 mium charged for insured losses covered by the Pro- 3 gram and the Federal share of compensation for in- 4 sured losses under the Program— 5 (A) in the case of any policy that is issued 6 before the date of enactment of this Act, not 7 later than 90 days after that date of enactment; 8 (B) in the case of any policy that is issued 9 within 90 days of the date of enactment of this 10 Act, at the time of offer and renewal of the pol- 11 icy; and 12 (C) in the case of any policy that is issued 13 more than 90 days after the date of enactment 14 of this Act, on a separate line item in the pol- 15 icy, at the time of offer and renewal of the pol- 16 icy; 17 (3) in the case of any policy that is issued after 18 the date of enactment of this Act, the participating 19 insurer provides clear and conspicuous disclosure to 20 the policyholder of the existence of the 21 $750,000,000,000 cap under subsection (e)(2), at 22 the time of offer, purchase, and renewal of the pol- 23 icy; 24 VerDate Sep 11 2014 18:21 Jun 16, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H6983.IH H6983 pamtmann on DSKBC07HB2PROD with BILLS 13 •HR 6983 IH (4) the participating insure [Text truncated for display. 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