One Small Step
Jun 3, 2020


Lawmakers in Congress introduced the Pandemic Risk Insurance Act (PRIA) of 2020, a federal backstop for pandemic-related business interruption insurance.  The measure is modeled after the Terrorism Risk Insurance Act, generally known as TRIA.  This week, we track PRIA’s trajectory, along with a number of related measures orbiting Congress and the states.



Introduced as H.R. 7011, PRIA would create a voluntary insurance program.  Participating insurance carriers would offer pandemic-related business interruption and event cancellation coverage that are eligible for reimbursement by a federal backstop. No losses would be paid under the program until industry insured losses exceed a $250 million aggregate trigger. The federal share of losses would be 95 percent of insured losses above each insurer’s deductible. The insurer deductible is defined as “the value of the participating insurer’s direct earned premiums during the immediately preceding calendar year, multiplied by 5 percent.” The bill establishes a $750 billion annual aggregate cap for federal compensation. We have this measure on the radar.



In related news, the House approved a bill (by a vote of 417-1) that would ease restrictions on the Paycheck Protection Program (PPP), giving borrowers 24 weeks instead of eight to spend the money and lowering the threshold that must be spent on payroll to 60 percent from 75 percent if the borrower wants full loan forgiveness.  The measure moves to the Senate for further debate.  As of last week, the Small Business Administration has approved $512.2 billion in PPP loans, leaving $150 billion of the $660 billion earmarked funds.  Net weekly lending through the program has been negative since mid-May, as some companies returned loans and fewer companies applied for them



As parts of the country phase into re-occupancy, the Centers for Disease Control and Prevention (CDC) announced recommendations for employers reopening their offices to prevent the spread of the coronavirus.  Strictly applied, the guidelines could remake corporate work experiences and reverse previous recommendations on commuting, urging people to drive to work by themselves, instead of taking mass transportation or car-pooling.



In a rare midnight ruling last Friday, the U.S. Supreme Court rejected a California church's request to ease restrictions on attendance at worship services.  This was the high court's first effort to balance religious freedom and public health during the coronavirus pandemic.  Chief Justice John Roberts joined the majority’s unsigned order denying the church's application for a stay of the statewide restrictions imposed by Governor Gavin Newsom (D-CA). The governor’s restrictions limit attendance at 25 percent of capacity or a maximum of 100 people.


And finally, the Department of Labor’s Occupational Safety and Health Administration (OSHA) updated guidance regarding the way employers determine whether to report confirmed cases of COVID-19 on their annual OSHA 300 accident and illness logs.  OHSA now requires individualized assessments of each case, as outlined in the guidance.  If, after the reasonable and good faith inquiry, the employer cannot determine whether it is more likely than not that exposure in the workplace played a causal role with respect to a particular case of COVID-19, the employer does not need to record that COVID-19 illness.  Roger that.  


Tort Reform


The Louisiana Legislature approved tort reform legislation, which supporters promise will lower the price of auto insurance in the Pelican State.  Senate Bill 418 would extend the deadline for filing a lawsuit from one year to two, lower the amount of damages sought in order to have the case heard by a jury instead of a judge from $50,000 to $5,000, limit medical expenses recovered to the actual payments made, require lawsuits to be filed against the other driver (in lieu of naming an insurance company), and allow judges and juries to reduce damage awards if the injured plaintiff didn’t wear a safety belt.



The legislation also requires insurance companies to reduce rates by 10% if their costs go down, unless they can prove to the insurance commissioner that the rate reduction would hurt their business enough to stop selling policies in Louisiana.  The bill is on the desk of Governor John Bel Edwards (D -LA), who has spoken against parts of the bill.  Louisiana has among the highest auto insurance rates in the nation.  In a similar way, starting July 2nd, drivers in the state of Michigan can select from a number of different options for personal injury protection (PIP), resulting from auto liability reform in the Great Lake State. Most drivers will choose from three levels of PIP coverage—$250,000, $500,000, or unlimited. However, capping PIP coverage means drivers may also be responsible for paying medical costs that exceed these caps. 


Making Our Way Around the Country


Staying with tort reform, Governor Kim Reynolds (R-IA) signed into law a first-of-its-kind measure that requires lawyers to prove why they name certain defendants when filing asbestos and silica lawsuits.  Under the bill, litigants will be required to file forms “specifying the evidence that provides the basis for each claim against each defendant,” and the plaintiff will be required to plead facts related to his or her specific relationship to each defendant.  Lawmakers approved the measure in late March, but the coronavirus pandemic delayed the bill signing.



The Texas Department of Insurance, Division of Workers’ Compensation (DWC) issued a mandatory data call for certain information related to COVID-19 injuries reported to selected insurance carriers on or after December 1, 2019. The data call is designed to provide DWC with immediate access to information necessary to determine the impact of COVID-19 injuries on the Texas workers’ compensation system.



This week marks the beginning of the Atlantic hurricane season. The National Oceanic and Atmospheric Administration (NOAA) is forecasting between 13 and 19 named storms, six to 10 of which could become hurricanes and as many as six of those hurricanes could develop into major storms of Category 3, 4, or 5 with winds of 111 miles per hour or higher. The average season sees three major hurricanes, making the 2020 forecast one of the most active seasons on record.



On this day, fifty-five years ago, NASA’s Gemini 4 blasted off from Cape Canaveral propelling Edward H. White II to become the first American astronaut to walk in space. This week, NASA astronauts again broke the Earth’s gravitational pull aboard SpaceX’s Crew Dragon spacecraft Endeavour and arrived at the International Space Station.  The mission marks the first time NASA astronauts docked the ISS from a commercial spacecraft. In these unprecedented and challenging times, The Way is reminded of NASA astronaut Ron Garan’s Orbital Perspective: “We are limited only by our own imagination and our will to act.”  Stay safe, stay well, and stay connected.


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