An insurance trade group has joined a chorus of New York officials in asking Congress to renew the Terrorism Risk Insurance Act, which is set to expire at the end of this year.
The law, passed in 2002 and renewed in 2005, has stabilized the insurance marketplace and helped eliminate market disruptions and uncertainties in the wake of the Sept. 11 attacks, according to the Independent Insurance Agents & Brokers of America (the Big “I”).
The group submitted written testimony this week during a field hearing held in New York’s City Hall by the House Financial Services Committee’s Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.
The law was passed after insurers began excluding terrorism from property policies after Sept. 11, 2001. Under the law, the federal government would pay most of the cost of losses from a foreign terror attack, up to a total of $100 billion a year, according to published reports.
The Big “I” testified that “even though the insurance marketplace responded effectively to the 9/11 losses, it was quickly apparent, and remains so today, that insurers could not handle the risk of further large-scale terrorist events without a federal backstop.”
In its written statement, the Big “I” went on to say that “the private insurance market is simply not in a position to handle the unpredictable nature and possibly immense size and scope of terrorist attacks.”
If the federal role lapses, the association says, terrorism risk coverage would become expensive or unavailable to many businesses.
In testimony before the committee, Sen. Charles Schumer, D-N.Y., said the pending expiration date creates a pattern of fear among insurers, published reports say. He was quoted as saying the legislation should cover at least another 15 years.
New York Mayor Michael R. Bloomberg told the panel that the program is crucial to the city’s economic health, published reports say.
While acknowledging the importance of terrorism coverage in cities like New York, the Big “I” says the issue is not just a “big city” or “big business” problem, adding that the economic impact would be widespread if the coverage becomes unavailable.
“As take-up rates have gone up across the country, we have seen terrorism coverage purchased by a wide and diverse variety of interests, from small towns in Mississippi to small and large businesses in New York City,” the association says.
“The Big ‘I’ is coordinating closely with other insurance trade associations, individual insurance companies and commercial policyholder groups to extend the current terrorism insurance program at the end of the year,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations.
Source: Independent Insurance Agents & Brokers of America
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