Establishes New Jersey Pandemic Risk Reinsurance Program.

S3637

SENATE, No. 3637

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED FEBRUARY 24, 2026

Sponsored by:

Senator� ANGELA V. MCKNIGHT

District 31 (Hudson)

SYNOPSIS

���� Establishes New Jersey Pandemic Risk Reinsurance
Program.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning business interruption insurance coverage
under certain circumstances and supplementing Title 17 of the Revised Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� As used in this act:

���� �Business interruption
insurance� means commercial lines of property and casualty insurance coverage
provided or made available for losses resulting from periods of suspended
business operations, whether provided under broader coverage for property
losses or separately.

���� �Commissioner� means the
Commissioner of Banking and Insurance.

���� �Covered public health
emergency� means any outbreak of infectious disease or pandemic for which an emergency
is declared:

���� (1)�� by the Governor during a
state of emergency declared pursuant to P.L.1942, c.251 (C.App.A:9-33 et seq.),
or a public health emergency declared pursuant to P.L.2005, c.222 (C.26:13-1 et
seq.);

���� (2)�� under the federal Public
Health Service Act; or

���� (3)�� by the President of the
United States as a public health emergency or major disaster under the Robert
T. Stafford Disaster Relief and Emergency Assistance Act.

���� �Department� means the
Department of Banking and Insurance.

���� "Eligible employee"
means a full-time employee who works a normal work week of 25 or more hours.

���� �Eligible insurer� means an
entity or affiliate that:

���� (1)�� issues policies insuring
against loss or damage to property that include the loss of use and occupancy
and business interruption in this State;

���� (2)�� is a recipient of direct
earned premiums for any type of commercial property and casualty insurance
coverage;

���� (3)�� is licensed or admitted
to provide insurance in New Jersey; and

���� (4)�� meets any other criteria
as determined by the commissioner.

���� �Fund� means the New Jersey
Pandemic Risk Reinsurance Fund created pursuant to section 4 of this act.

���� �Insurer deductible� means the
value of the insurer�s direct earned premiums during the immediately preceding
calendar year, multiplied by 5%.

���� �Property and casualty
insurance� means commercial lines of property and casualty insurance, including
excess insurance, workers� compensation insurance, and directors and officers
liability insurance. �Property and casualty insurance� does not include:

���� (1)�� private mortgage
insurance or title insurance;

���� (2)�� medical malpractice or
other professional liability insurance;

���� (3)�� life or health insurance;
or

���� (4)�� flood insurance provided
under the National Flood Insurance Act.

���� 2.��� The commissioner shall
establish the New Jersey Pandemic Risk Reinsurance Program pursuant to the
following guidelines:

���� a.���� No compensation shall
be paid from the program unless the aggregate industry losses in New Jersey
resulting from a covered public health emergency exceed $75 million.

���� b.��� Subject to the
availability of funds, the aggregate annual maximum amount paid out of the
program shall not exceed $500 million.

���� c.���� Losses in excess of the
insurer deductible but not exceeding the aggregate annual maximum amount
pursuant to subsection b. of this section shall be covered jointly by the
program and participating eligible insurers subject to each insurer�s
retention.

���� d.��� The program shall pay
incurred losses on a pro rata basis, the methodology for which shall be
determined by the commissioner within 240 days of the effective date of this
act.�

���� e.���� Reinsurance purchased
by a participating eligible insurer through the private market shall not affect
the calculation of the insurer�s deductible or retention.

���� 3.��� a� As a condition of
participating in the New Jersey Pandemic Risk Reinsurance Program established
pursuant to this act, an eligible insurer shall offer to an insured or
prospective insured with no more than 100 eligible employees in the State of
New Jersey, a rider to the insurance policy which includes, as a covered peril
under that policy, coverage for global virus transmission or pandemic, or both,
pursuant to a covered public health emergency.

���� b.��� The Commissioner of
Banking and Insurance shall, on an expedited basis, review and approve, as
appropriate, any insurance policy rider submitted by an insurer and designed to
provide the coverage offered pursuant to this section.

���� 4.��� a. There is created a
special, non-lapsing fund in the Department of Banking and Insurance that shall
be designated the �New Jersey Pandemic Risk Reinsurance Fund.� The fund shall
be maintained as a separate account and administered by the Commissioner of
Banking and Insurance.� The fund shall be used to establish and fund the New
Jersey Pandemic Risk Reinsurance Program established pursuant to section 2 of
this act.

���� b.��� The fund shall consist
of:�

���� (1)�� an amount the
commissioner deems appropriate to fully fund the program, which shall not be
less than $50 million, appropriated annually out of the General Fund of the
State;

���� (2)�� not less than $50
million out of the amounts of federal government assistance provided to this
State pursuant to "Coronavirus Aid, Relief, and Economic Security
Act," Pub. Law 116-136; and

���� (3)�� not less than $50
million out of the amounts of additional federal government assistance that may
become available to this State with regard to the coronavirus disease 2019
pandemic.

���� c.���� All interest earned on
the moneys that have been deposited into the fund shall be retained in the fund
and used for purposes consistent with the fund.��������

���� d.��� Moneys in the fund shall
only be used for the purposes established in this act.

���� 5.��� Upon the enactment of
any legislation to establish a Federal Pandemic Risk Reinsurance Program, or
any similar program at the federal level, the commissioner shall gradually
cease operation of the New Jersey Pandemic Risk Reinsurance Program established
pursuant to this act.

���� 6.��� This act shall take
effect immediately and shall apply to insurance policies issued or renewed
beginning 90 days after the date of enactment.

STATEMENT

���� This bill establishes the New
Jersey Pandemic Risk Reinsurance Fund� and the New Jersey Pandemic Risk
Reinsurance Program (program) for eligible insurers offering business
interruption insurance coverage pursuant to the bill when claims payable
resulting from the covered public health emergency exceed $75 million
Statewide.

���� Under the bill, the
Commissioner of Banking and Insurance is to establish the New Jersey Pandemic
Risk Reinsurance Program pursuant to the following guidelines:

���� a.���� No compensation is to
be paid from the program unless the aggregate industry losses in New Jersey
resulting from a covered public health emergency exceed $75 million.

���� b.��� Subject to the
availability of funds, the aggregate annual maximum amount paid out of the
program is not to exceed $500 million.

���� c.���� Losses in excess of the
insurer deductible but not exceeding the aggregate annual maximum amount
pursuant to the provisions of the bill are to be covered jointly by the program
and participating eligible insurers subject to each insurer�s retention.

���� d.��� The program is to pay
incurred losses on a pro rata basis, the methodology for which is to be
determined by the commissioner within 240 days of the effective date of this
act.�

���� e.���� Reinsurance purchased
by a participating eligible insurer through the private market is not to affect
the calculation of the insurer�s deductible or retention.

���� The bill provides that the New
Jersey Pandemic Risk Reinsurance Fund is to consist of an annual appropriation
out of the General Fund of the State of not less than $50 million.� In
addition, the bill provides for not less than $50 million to be allocated out
of the amounts of federal government assistance provided to this State pursuant
to "Coronavirus Aid, Relief, and Economic Security Act," Pub. Law
116-136.� Lastly, the bill provides that, out of the amounts of additional
federal government assistance that may become available to this State with
regard to the coronavirus disease 2019 pandemic, not less than $50 million is
to be allocated to the New Jersey Pandemic Risk Reinsurance Fund.

���� The bill provides that, as a
condition of participating in the New Jersey Pandemic Risk Reinsurance Program
established pursuant to this act, an eligible insurer is required to offer to
an insured or prospective insured with no more than 100 eligible employees in
the State of New Jersey, a rider to the insurance policy which includes, as a
covered peril under that policy, coverage for global virus transmission or
pandemic, or both, pursuant to a covered public health emergency.

���� The Commissioner of Banking
and Insurance is to review and approve, as appropriate and on an expedited
basis, any insurance policy rider submitted by an insurer and designed to
provide the coverage offered pursuant to this section.