Establishes New Jersey Pandemic Risk Reinsurance Program.
The program is designed to cover losses that exceed an insurer's deductible, with a maximum annual payout capped at $500 million. This structure intends to collaboratively distribute the financial impacts between the state-funded program and the participating insurers, enhancing the safety net for businesses navigating the uncertainties posed by pandemic-related disruptions. The role of the Department of Banking and Insurance is pivotal, as it will oversee the operation and financing of this initiative, including reviewing and approving riders that include coverage for pandemics.
Senate Bill S1808, also known as the New Jersey Pandemic Risk Reinsurance Program, establishes a framework for eligible insurers to provide business interruption insurance coverage during declared public health emergencies, provided that claims exceed $75 million statewide. The bill aims to provide financial support and to mitigate the losses incurred by businesses due to pandemics and outbreaks of infectious diseases. This initiative establishes a special fund, the New Jersey Pandemic Risk Reinsurance Fund, which will be primarily funded through state appropriations, federal assistance, and additional federal funding related to public health emergencies.
Despite its supportive goal for businesses, the bill may raise concerns among stakeholders regarding the adequacy of the proposed funding and the specific criteria for eligibility and compensation. There could also be disagreements over the potential impacts on insurers' practices and how these changes could affect insurance premiums for businesses in the long run. Furthermore, adjustments in state control over reinsurance frameworks may instigate discussions regarding the balance of public versus private sector risk management in insurance, especially in light of recent public health crises.