A panel of real estate finance and economic experts appearing on Capitol Hill on Oct. 4 identified the continuing U.S. economic slowdown and emerging property and casualty insurance issues as key threats to the nation’s $20-trillion real estate sector in the aftermath of the Sept. 11 terrorist attacks.
According to Owen Thomas, a managing director at Morgan Stanley and a member of The Real Estate Roundtable, real estate is very much on the front lines of the crisis affecting New York and rippling throughout the broader U.S. economy. Thomas spoke at a briefing hosted by the Congressional Real Estate Caucus that drew about 100 real estate professionals, association leaders and members of Congress.
Another serious concern is property owners’ ability to acquire adequate insurance coverage in the wake of the terrorist attacks. Before Sept. 11, property and casualty and general liability insurance policies normally covered damages resulting from acts of terrorism, excluding only damages relating to acts of war. Future policies are now expected to exclude both types of losses-a change that would severely impair property owners’ ability to conduct routine real estate transactions.
According to Real Estate Roundtable President and COO Jeffrey DeBoer, without adequate insurance, it would be difficult-if not impossible-for real estate owners to operate or purchase properties or refinance loans. DeBoer noted that the Roundtable urges policymakers to understand this as a major threat to the economy and to address this issue expeditiously.
DeBoer added that the Roundtable and other real estate groups are encouraging U.S. policymakers to study the United Kingdom’s “Pool Re” system as a possible model for insuring against acts of terrorism.
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