A broad-based coalition of property/casualty insurance company, insurance producer and reinsurance trade associations commended the National Association of Insurance Commissioners (NAIC) for adopting a resolution supporting a two-year extension of the Terrorism Risk Insurance Act (TRIA) at the NAIC summer meeting in San Francisco.
In a statement on behalf of the industry-wide coalition, Robert Zeman, senior vice president, industry and regulatory affairs for the Property Casualty Insurers Association of America (PCI) told the members of the Terrorism Implementation Working Group, “Our goal, with the assistance of the NAIC, is to make sure that there is a stable insurance market with an appropriate mechanism to address the significant catastrophic loss that can occur as a result of terrorist acts.
“The NAIC resolution is an important step and sends a strong message to Congress that regulators support a two-year extension of this important law,” said Zeman.
Other members of the coalition echoed Zeman’s statement, praising the NAIC’s efforts on this important issue. David Snyder, American Insurance Association (AIA) vice president and assistant general counsel, added, “The coalition appreciates the NAIC’s support for a continued federal backstop, both through letters to Congress and the Treasury Department, and through persuasive testimony before the U.S. House and Senate. The NAIC, the business community, and in particular the commercial policyholders, are united with the property-casualty industry in the common goal of extending TRIA temporarily to devise a long-term mechanism for managing terrorism exposure.”
Snyder also reiterated the critical role TRIA plays in the U.S. economy, noting that, “Just as Americans are doing everything we can to help emergency first responders to terrorist acts, TRIA helps the financial first responders.”
“Terrorism remains an uninsurable risk, and that is why extending TRIA is critical for insurers and the business community,” says Charles E. Symington Jr., Independent Insurance Agents & Brokers of America (IIABA) senior vice president of federal government affairs. “Without the certainty of a federal backstop, insurers and their policyholders are at risk in the event of terrorist attacks. For the economic stability of the business community, and those who insure it, extension of a federal backstop is a must.”
Prior to adoption, the resolution was amended to remove the alternative proposal for a “run-off” of Year 3 of TRIA that would have deflected attention from the main point of the resolution – a clean, two-year TRIA extension – and that would not have allowed sufficient time to gather and analyze all available data, and to develop, enact and implement a long-term mechanism to manage terrorism exposure.
The industry coalition has been encouraged by the fact that more than 25 states have already approved the ISO conditional endorsements. Insurers are actively encouraging public policymakers in the remaining states to do as soon as possible.
“The economic health of the industry depends upon the ability of insurers and their clients to make appropriate financial decisions based on the options available. These filings provide an important tool for insurers and business to manage this risk if TRIA is not extended beyond the end of 2005,” said Zeman.
The insurance industry organizations participating in the coalition are AIA, American Association of State Compensation Insurance Funds, Council of Insurance Agents & Brokers of America, IIABA, National Association of Mutual Insurance Companies, National Association of Professional Insurance Agents, PCI, Reinsurance Association of America and Surety Association of America.
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