David Isenberg, president of the Professional Insurance Agents of New York State Inc., also testified at hearings considering the implementation of the federal Terrorism Risk Insurance Act of 2002, telling the Assembly Insurance Committee that insurance producers play a key role in implementing the provisions of the Act.
Speaking at a hearing sponsored by the committee and Assembly Speaker Sheldon Silver, Isenberg confirmed the impact on the New York marketplace of TRIA provisions that require insurers to offer terrorism insurance to their commercial clients. He noted that in almost all cases, it will be the insurance agent or broker who will ultimately need to undertake the role of explaining the options created by the Act, including their effect on the client’s pricing and coverage. “As usual with ‘mandatory offers’ of the kind the Act establishes, it is PIANY member agents and brokers who step to the front line and assume the key role of informing and assisting their clients, while helping their companies carry out their statutory obligations,” Isenberg stated.
The PIANY strongly supported passage of the Act, Isenberg indicated, but he noted that the sheer volume of work involved in its implementation had caught both insurers and producers by surprise. Implementation has been a complex process, he continued, since some requirements took effect immediately but regulatory interpretation and guidance have emerged more gradually.
Asked to comment on how well the Act is meeting its stated goals, Isenberg said the market effects are too early to judge, but stressed that it’s important to achieve a financial backstop for insurers, protecting their solvency against future terrorist attacks. “This was especially important in New York state,” he emphasized, “where licensed companies did not have approved terrorism exclusions, yet found reinsurance harder to come by and more expensive,” following the WTC attack.
Isenberg praised the NYSID for its pro-active approach to maintaining state regulatory oversight of the implementation process, to the extent allowed by the federal Act. He also thanked the Assembly for its consistent support of PIANY’s position that commercial insurance should not be deregulated, except for very large risks. “The Assembly’s firm stance on this issue has supported the department’s ability to maintain control of market reactions to the events of Sept. 11, 2001,” Isenberg concluded.
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