Sec. 4. Pandemic Risk Reinsurance Program
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There is established in the Department of the Treasury the Pandemic Risk Reinsurance Program. Notwithstanding any other provision of State or Federal law, the Secretary shall administer the Program, and shall pay the Federal share of compensation for insured losses in accordance with subsection (e). Each entity that meets the definition of an insurer under this Act shall participate in the Program. Except as provided under section 6, this Act may not be construed to affect any policy for property and casualty insurance in force on the date of the enactment of this Act.
No payment may be made by the Secretary under this section with respect to an insured loss that is covered by an insurer, unless— except in the case of a parametric non-damage business interruption insured loss, the person that suffers the insured loss, or a person acting on behalf of that person, files a claim with the insurer; the insurer provides clear and conspicuous disclosure to the policyholder of the premium charged for insured losses covered by the Program and the Federal share of compensation for insured losses under the Program— in the case of any policy that is issued before the date of enactment of this Act, not later than 90 days after that date of enactment; in the case of any policy that is issued within 90 days of the date of enactment of this Act, at the time of offer and renewal of the policy; and in the case of any policy that is issued more than 90 days after the date of enactment of this Act, on a separate line item in the policy, at the time of offer and renewal of the policy; the insurer processes the claim for the insured loss in accordance with appropriate business practices, and any reasonable procedures that the Secretary may prescribe; and the insurer submits to the Secretary, in accordance with such reasonable procedures as the Secretary may establish— a claim for payment of the Federal share of compensation for insured losses under the Program; written certification— of the underlying claim; and of all payments made for insured losses; and certification of its compliance with the provisions of this subsection.
During each calendar year, each entity that meets the definition of an insurer under this Act— shall make available, in all of its property and casualty insurance policies, coverage for insured losses; and shall make available property and casualty insurance coverage for insured losses that does not differ materially from the terms, conditions, amounts, limits, deductibles, or self-insured retentions and other coverage limitations applicable to losses arising from events other than public health emergencies.
During each calendar year, each entity that meets the definition of an insurer under this Act shall in addition make available, in all its commercial property insurance policies, parametric non-damage business interruption insurance coverage for insured losses. An insurer subject to the requirement in subparagraph
(A)may satisfy the requirement by arranging for the parametric non-damage business interruption insurance coverage to be made available to the insured by either— an affiliate of the insurer; or a parametric insurance facility in which the insurer participates. The Secretary shall issue regulations, as soon as practicable after the date of enactment of this Act, that establish eligibility criteria and other standards for parametric insurance facilities. In general— such facilities may be established and governed subject to supervision by the insurance commissioner of the domiciliary State and if qualified by the Secretary will be permitted to provided coverage in all States; insurer capital contribution to a facility may be in the form of surplus note or similar instrument which may bear a coupon but subject to all policyholder claims; and a facility may, subject to regulatory approval and any limitations in the Secretary’s regulations, distribute profits beginning after the expiration of the economic recovery period. Nothing in this section shall be construed to prohibit or limit the ability of an insurer to provide supplemental business interruption insurance coverage in addition to the coverage made available under paragraph (2). The Secretary shall issue regulations, as soon as practicable after the date of enactment of this Act, that apply the provisions of this Act to State residual market insurance entities and State workers’ compensation funds. For purposes of the regulations issued pursuant to paragraph (1)— a State residual market insurance entity that does not share its profits and losses with private sector insurers shall be treated as a separate insurer; and a State residual market insurance entity that shares its profits and losses with private sector insurers shall not be treated as a separate insurer, and shall report to each private sector insurance participant its share of the insured losses of the entity, which shall be included in each private sector participating insurer’s insured losses. Any insurer that participates in sharing profits and losses of a State residual market insurance entity shall include in its calculations of premiums any premiums distributed to the insurer by the State residual market insurance entity. In general, the Federal share of compensation under the Program to be paid by the Secretary for insured losses of an insurer or a parametric insurance facility during each calendar year shall, on a quota share basis, be equal to 95 percent of such insured losses. In addition to the quota share reinsurance provided under subparagraph (A), the Secretary may, upon application by an insurer or parametric insurance facility, provide such insurer or facility with stop-loss protection for insured losses, for such price and on such other terms and conditions as the Secretary deems consistent with the purposes of the Act. In general, such stop loss protection shall not have an attachment point lower than provided in any catastrophe excess of loss reinsurance program which the insurer or facility has in effect for the same period. The Secretary may, in consultation with the NAIC or the appropriate State regulatory authority, apply the provisions of this Act, as appropriate, to other classes or types of captive insurers and other self-insurance arrangements by municipalities and other entities (such as workers compensation self-insurance programs and State workers compensation reinsurance pools), but only if such application is determined before the commencement of a covered public health emergency in which such an entity incurs an insured loss and all of the provisions of this Act are applied comparably to such entities. This Act may not be construed to limit or prevent insurers or facilities from obtaining reinsurance coverage for insured losses retained by insurers or facilities pursuant to this section, nor shall the obtaining of such coverage affect the calculation of such deductibles. The amount of financial assistance provided pursuant to this section shall not be reduced by reinsurance paid or payable to an insurer from other sources, except that recoveries from such other sources, taken together with financial assistance for the calendar year provided pursuant to this section, may not exceed the aggregate amount of the insurer’s insured losses for the calendar year. If such recoveries and financial assistance for the calendar year exceed such aggregate amount of insured losses for the calendar year and there is no agreement between the insurer and any reinsurer to the contrary, an amount in excess of such aggregate insured losses shall be returned to the Secretary. During the economic recovery period, including any reset extension, no premium will be charged to insurers or parametric insurance facilities for the Federal quota share reinsurance protection provided by the Program under subsection (e)(1)(A). Commencing with the expiration of the economic recovery period, the Secretary shall be authorized to prescribe a rating plan for the quota share reinsurance provided by the Program under subsection (e)(1)(A) for both the parametric non-damage business interruption insurance and for other lines of property and casualty insurance. The rating plan shall be designed to encourage broad participation in the coverage made available under the Program, and in particular shall be designed to recover the cost of the reinsurance program over a period of not less than 5 years.