AIA, CIAT Put Terrorism Risk Principles Before Congress

Washington - Two Washington-based groups are pushing a set of common principles to Congress as it prepares to take up legislation that would renew the federal backstop for terrorism risk insurance.   The Coalition to Insure Against Terrorism (CIAT), and the American Insurance Association (AIA), are passing their message to The House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises chaired by Rep. Paul Kanjorski (D-Pa.), who will hold a hearing on this issue tomorrow (April 24).   A critical issue that must be resolved by the new legislation, according to CIAT and AIA, is the separate treatment for nuclear, biological, chemical and radiological (NBCR) attacks, which would recognize the unique characteristics of these events. Reports issued last year by the U.S. Government Accountability Office and the President's Working Group on Financial Markets confirmed that the private market has not provided coverage for NBCR attacks outside of workers' compensation lines. Insurers are required by state law to provide the coverage for workers' compensation.   To address this issue, AIA and CIAT agree that the new legislation should contain a mandatory "make-available" provision that would require insurers to follow the standard workers' compensation model. The organizations' joint principles stress that the make-available provision must be accompanied by a clear acknowledgement that the federal government is responsible for NBCR terrorism losses above primary insurers' individual NBCR retention levels. Additionally, TRIEA's insurer co-pay requirement for NBCR would be eliminated.   "Importantly, the CIAT/AIA joint principles call for the new legislation to be permanent, for the distinction between foreign and domestic acts of terrorism to be eliminated and to recognize the extreme nature of NBCR attacks through a lower deductible and certainty with respect to the role of private insurers in managing NBCR terrorism risk," said Marc Racicot, AIA's President. "These principles represent a set of parameters that we believe should be considered as part of any TRIEA extension bill."   Martin DePoy, coordinator of CIAT's steering committee, notes that the organizations are gratified by the broad-based, bi-partisan support Congress has shown for continuing the terrorism reinsurance backstop, but says policyholders and insurers alike believe that new legislation should address some important issues that were not fully resolved by the Terrorism Risk Insurance Act and its extension. "We believe the new program should end only when Congress determines terrorism no longer is a significant threat," said DePoy.   For more information, visit http://www.insureagainstterrorism.org   Source: American Insurance Association