The National Association of Mutual Insurance Companies (NAMIC) issued a response Aug. 22 to the Consumer Federation of America (CFA) study, “How the Lack of Federal Back Up for Terrorism Insurance Has Affected Insurers and Consumers: An Update,” released earlier in the day.
“Passing a terrorism reinsurance bill is extremely important,” Monte Ward, vice president-federal affairs, said. “The evidence is mounting that the economy is being negatively impacted by the lack of terrorism insurance. Without terrorism legislation that covers both commercial and personal lines insurance there will continue to be a shortage of terrorism insurance.
“NAMIC seeks a terrorism backstop not to mitigate losses that have already occurred, but to try to protect against the risk of future terrorism-a risk which cannot be measured and hence, cannot be priced. Insurance spreads risk. Risk that cannot be quantified cannot be spread with any precision or confidence. Consumers are best served by insurers that remain solvent.
“Terrorism poses a greater risk to commercial, especially ‘trophy’ properties, than it does to property covered by personal lines insurance such as homeowners and automobile insurance. However, property covered by personal lines do have some exposure to terrorism risks and they should be covered by any legislation that is passed by Congress.”
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