INSURERS PRAISE BUSH

In reaction to President Bush’s State of the Union speech, the American Insurance Association (AIA) stated that the President’s focus on the continuing danger of another terrorist attack should remind Congress that America’s economic security continues to be at risk since no federal terrorism insurance backstop has been created. The insurance industry and other members of the business community are pushing Congress for a short-term co-insurance arrangement between the private insurance market and the federal government. The arrangement would have the federal government replace much-needed market capacity formerly provided by the reinsurance industry. AIA President Robert E. Vagley said that Congress needs to act soon, adding that providing a federal backstop will help American consumers by making sure the companies they do business with, both large and small, can continue to grow and prosper. According to Vagley, lack of action means terrorism remains uninsurable because of the incalculable risk of potential terrorism losses. Many sectors of the American economy are beginning to feel the effects of the insurance crisis, with terrorism insurance now either difficult or impossible to obtain. Federal securities lawyers are even raising the prospect of whether a company’s lack of terrorism insurance coverage should have to be disclosed to investors as a potential “material risk.”

Topics Carriers