Alliance of American Insurers President Rodger Lawson, is praising Tuesday’s Senate passage of the Terrorism Risk Protection Act Conference Report, HR 3210, as “another important step on the road to insurance market stabilization in the aftermath of Sept. 11, 2001.
“We believe this action by the Senate will create new incentives for insurance markets, and will be very helpful to the overall economy,” Lawson said. “We recognize that without the strong support of President Bush, who championed this legislation, and without the stewardship of Sen. Chris Dodd (D-CT) and Rep. Mike Oxley (R-OH), we would not be where we are today.”
The legislation establishes a program within the U.S. Department of the Treasury, under which the Federal government would share the risk of loss from future terrorist attacks with the insurance industry.
“Not a week goes by without a warning of a terrorist attack. This program, while still requiring a substantial financial commitment from insurers, will spread the risk, stabilize the market and give insurers the opportunity to once again provide coverage without the pending threat of insolvency from a future terrorist act,” Lawson said.
Insurance companies providing commercial property/casualty insurance are required to participate in the program, but commercial policyholders have the option of declining terrorism coverage. Also included in the coverage are state residual market facilities and state workers’ compensation funds.
“The Alliance of American Insurers stands ready to work with the Department of the Treasury and appropriate state officials to assist in the implementation phase of the new law,” David Farmer, Alliance senior vice president for federal affairs, added.
The legislation creates an exclusive Federal cause of action, governed by applicable state law, for all suits for property loss, personal injury or death arising out of a terrorist event, and consolidates claims into a single Federal district court assigned by the Judicial Panel on Multi-District Litigation. These requirements, though not as far-reaching as some would like, will help, Farmer noted.
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