Nearly 100 percent of National Association of Mutual Insurance Companies (NAMIC) members questioned believe that Congress should pass federal backstop legislation for terrorism insurance, according to a survey of a group of member company CEOs who were considering terrorism reinsurance issues.
An overwhelming 97.7 percent of the NAMIC member company CEOs surveyed rated the importance of Congress passing federal backstop legislation as a five or greater on a scale of 1 to 10, with 10 being the greatest importance, according to the report, “Terrorism Exposure and Coverage: Survey to Member Company CEOs,” released Feb. 6.
“The results of this survey clearly demonstrate that companies remain extremely concerned about the threat of terrorism and its impact on the insurance marketplace,” said Jennifer C. Gibson, NAMIC’s director-federal affairs. “NAMIC will share the results of this survey with key players on Capitol Hill to continue to make the case that a federal backstop for terrorism insurance is needed.”
Forty-three percent of selected NAMIC member company CEOs responded to the survey, conducted by NAMIC’s Research Department. The study reports that more than 65 percent of NAMIC member company CEOs surveyed rated the importance of Congress passing federal backstop legislation as either an 8 or greater on a scale from 1 to 10.
Does your company have significant exposure to an act of terrorism?
Highlights of the report include:
* 58 percent of the respondents feel their company does not have a significant exposure to an act of terrorism.
* 25 percent believe they do have a significant exposure to an act of terrorism; and
* 16 percent are unsure.
More than 88 percent of NAMIC CEOs surveyed support the insurance industry pursuing terrorism coverage legislation, and more than 51 percent of those respondents support the Senate version of legislation. The Senate version provides for a risk-sharing mechanism between the federal government and the insurance industry. The House-passed Terrorism Risk Protection Act establishes a loan program under which any assistance would have to be paid back to the government through assessments and surcharges.
What steps have CEOs taken since Sept. 11 to limit their company’s exposure to terrorism risk?
*46 percent of respondents had taken steps other than reinsurance or non-renewal to limit their company’s exposure.
* 42 percent opted for reinsurance.
Did companies file endorsements to exclude terrorism coverage?
* 70 percent – no
* 28 percent – yes
In other findings, 44 percent of the respondents surveyed said they do not believe their insureds consider the risk of terrorism a significant exposure.
Meanwhile, 39.5 percent of the respondents are unsure whether it is a significant exposure or not, and 16.3 percent of the respondents believe it is.
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