PIACT Opposes Conn. SFP Change

February 26, 2004

The Professional Insurance Agents of Connecticut Inc. is also concerned about the proposed changes addressed in House Bill 5200, but disagrees with the position taken by the AIA (see related article). The organization issued a bulletin, noting that they could have “a great impact on fire insurance coverage” in the state.

The announcement summarized the testimony given by Steven Imbriaco, Esq., PIACT government affairs counsel, during a public hearing before the Insurance and Real Estate Committee. The bill would allow insurers the right to exclude terrorism coverage from the Standard Fire Policy for commercial risks.

“Despite the fact that the events of Sept. 11 are now several years in the past, we should remember that our nation and this state remain on a heightened alert level to this day,” Imbriaco stated. “Now we see an attempt to diminish this minimum statutory guarantee of coverage, overturning more than 100 years of consumer protection tradition.”

While similar to a bill presented to the committee last year, which PIACT also opposed, one significant difference is that H.B. 5200 is limited to commercial policies only. Furthermore, the wording of the bill gives insurers the option of whether or not to insure losses by fire caused by terrorism, as opposed to adding terrorism to the list of excluded perils.

“This wording is illusory because if given the option, few if any insurers will choose to insure terrorism-related losses,” Imbriaco pointed out. “Companies may argue that the current federal program requires them to offer terrorism coverage, exposing them to financial ruin, but we have all learned that terrorism losses can be enormous, and insurers will jump at the opportunity to avoid having to insure against them.”

The PIACT indicated that “Additional problems with the wording include the bill’s failure to define ‘terrorism.’ Instead it relies on the definition that has yet to be declared by the Insurance Commissioner. Since the effects of the bill add terrorism to the list of perils excluded from the Standard Fire Policy, a proper definition should be in place in order to provide an accurate understanding of the proposed legislation.

“Accepting H.B. 5200 would leave coverage gaps in fire insurance policies throughout Connecticut. For this reason and those mentioned above, PIACT strongly urged the committee to oppose the bill.”

Mr. Imbriaco’s full testimony is available from the PIACT. Contact Mary Christiano or Jaye Czupryna at (800) 424-4244.

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