The tragedy of Sept. 11 dealt a terrible blow to America’s economy, but the property and casualty insurance industry is playing a vital role in helping the United States recover. A full recovery, however, depends upon the creation of a federal backstop to share the risk of another large-scale terrorist attack.
That was clearly the message sent to Massachusetts legislators during a forum on terrorism and insurance held at the State House by the American Insurance Association (AIA) and Rep. Ronald Mariano, House Chair of the Joint Committee on Insurance.
“We are all painfully aware that the events of September 11 have altered the American landscape forever. In addition to the tragic loss of human life, our economy was dealt a body blow that day,” Donald Baldini, AIA assistant vice president, northeast region, said. “The insurance industry is expected to pay in excess of $50 billion in losses as a result of the terrorist attacks, yet is not asking for a government bailout. We all realize the threat of terrorism remains even though there is no accurate way to quantify or price that risk. That is why a risk-sharing mechanism with the federal government for future terrorists attacks is needed.”
Baldini moderated a presentation by a panel that included representatives of Travelers Property Casualty, the Insurance Services Organization, the Reinsurance Association of America and Liberty Mutual Insurance Group.
The panel explained the lack of reinsurance to cover terrorism risks.
They also outlined how the attacks came at a time when poor investment returns for insurers and higher costs were already driving up prices and restricting availability.
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