Terrorism Insurance Remains Elusive

September 12, 2002

Terrorism coverage remains limited to large commercial property holders, one year after the Sept. 11 attacks, according to an article in the Washington Post. American International Group (AIG) CEO Maurice Greenberg said that the lack of availability is a problem that needs federal intervention.

Greenberg spoke recently at a terrorism discussion at the Center for Strategic and International Studies in Washington.

Congress has still been unable to reach a decision on a proposed federal backstop program that would provide financial support in the event of other terrorist attacks. Little progress occurred over the August recess in settling fundamental differences between the house and the Senate committees on the issue.

The Senate bill proposes the availability of billions of dollars for insurers to pay claims with. The House bill provides funds, yet requires insurers and policyholders to repay them.

Rep. Michael Oxley (R-Ohio) said that an informal meeting took place during the congressional session held recently in New York to discuss the bill. He expects the final bill to be ready by the end of September.

While some consumer advocacy groups oppose the bill and believe the industry should work the issue out themselves, Greenberg noted that there is little incentive for reinsurers to offer terrorism coverage, based on the losses of the Sept. 11 events coupled with other catastrophes, such as the recent floods in Europe.

He also added that he would buy reinsurance to reinforce AIG’s policies, but only if full coverage is available.

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