On Sept.17, key congressional leaders from the U.S. House of Representatives Committee on Financial Services sent a letter to National Association of Insurance Commissioners (NAIC) President Kathleen Sebelius regarding the recent terrorist attacks and the insurance industry response. The letter states: “The terrorist attack on our country last Tuesday was one of the greatest tragedies the American people have ever faced. The Financial Services Committee is extremely grateful that the [NAIC] employees that were located in the #7 World Trade Center were able to evacuate and reach safety. The nation’s prayers are with those who were not so fortunate, and their families.
“This tragedy will likely result in the greatest loss the insurance industry has ever faced, both in terms of human life and monetary losses. The ability and willingness of the industry to fulfill its obligations to provide compensation for the lost lives and the rebuilding of our country are absolutely critical. It is a testament to the good faith of the industry that numerous insurers have already publicly stepped forward and pledged their full cooperation and commitment to honoring their contracts. America has the strongest insurance industry in the world, and we are confident that our companies will be willing and able to keep the promises they have made to their policyholders while remaining structurally sound and solvent.
“With that said, there has been some concern expressed that companies may deny coverage to victims of this tragedy based on ‘exclusions for acts of war.’ While news releases from individual companies lead us to believe that this is unlikely, it would be completely unacceptable if it were to occur. Any attempt to evade coverage obligations by either primary insurers or reinsurers based on such legal maneuvering would not only be unsupportable and unpatriotic – it would tear at the faith of the American people in the insurance industry.
“Through necessity our government is voicing outrage through words of war. This is critical to prepare our country for the difficult battle ahead. But this rhetoric reflects the passion and determination of our country, not the legal reality of Tuesday’s destruction. We do not believe that any just interpretation of last Tuesday’s tragic events would permit an insurer or reinsurer to invoke an ‘act of war’ exclusion to escape its obligations of Tuesday’s tragedy.
“We believe and expect that the entire insurance industry will honor its obligations on this issue without question and in complete good faith. But caution dictates that we seek confirmation from all involved insurers, domestic and foreign, primary insurers and reinsurers, that they will honor their commitments.”
“We appreciate your assistance in this matter and the leadership that you and the other commissioners have demonstrated in managing this crisis. We look forward to your support, and that of all the commissioners and the NAIC, in ensuring that the human needs of the crisis are quickly addressed, that all contractual obligations are fulfilled in a timely manner, and that no company undercuts the entire system by trying to evade its responsibilities.
“Finally, a primary responsibility of the commissioners will be to closely monitor the solvency of those insurers that must pay for the losses caused by the terrorist attack. Inasmuch as this is an issue of tremendous national import, we ask that you keep the Committee apprised of the financial health of these companies. Working together, the insurance industry and the citizens of our great nation will rebuild our country stronger than ever before.
“Please let us know if the Committee can assist in any way in helping your offices address this crisis for the American people.”
Signatories are Financial Services Committee Chairman Mike Oxley (R-OH); Financial Services Committee Ranking Democrat John LaFalce (NY); Rep. Richard Baker (R-LA), chairman of the committee’s Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee; and Rep. Paul Kanjorski (PA), the ranking Democrat on this subcommittee. This subcommittee has primary House jurisdiction over insurance issues.
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