Leave it to our “wise” leaders in Washington. They have time to pass private laws to prevent disconnection of feeding tubes, but don’t get the big picture of the terrorism insurance issue.
If they withdraw this reinsurance,all insurers are going to redline terrorism target cities. NY will be especially hard hit because it has so many targets and won’t allow insurers to exclude terrorism or ensuing damage.
First, It is clear that the administration knows NOTHING about securring coverage in New York (Terrorism USA). Second, I can’t beleive how the administration can compare ecenomic conditions as the rational to not renew the act. The administration loves to use 9/11 as thier reasons for their core agenda, however they have NO Clue as to how this affects insured’s and property owners in New York. They need to get their head OUT OF THE SAND. TRIA is important and needs to be renewed.
I’m not sure that the administration has looked at all angles realtive to TRIA. The larger question should be, is the industry ready to go it alone on the issue of terrorism coverage. To cite the economic condition of the country is only a small area to look at when answering this question. In short, TRIA needs to be continued.
The Federal Govt is going to be on the hook for TRIA whether they recognize it or not. Insurers can use the “acts of war” clause to exclude coverage next time. The Gov’t can then decide to either step in (declare a state of emergency or something) or let the economy collapse completely.
Just because the Gov’t knows that its liable for something, doesn’t mean that it wants to admit liability. Take a look at how its financing its “Operations” (Congress never declared war) in Iraq and Afghanistan — not part of the Pentagon budget but as “special appropriations.”
After reading the feedback, I felt compelled to offer what appears to be a minority view:
TRIA is not reinsurance, it is a government subsidy made necessary by the devastation of September 11. Although the ultimate cost of this subsidation is ultimately passed back to the taxpayers, consider the notion that government involvement in private industry should be reserved for times of great emergency only.Continuing TRIA does not encourage the entreprenurial spirit that is a pillar of our industry.
“…and would expose the American taxpayer to excessive and inappropriate costs.”?! How about those people who milk FEMA and then rebuild on the waterfront decade after decade? That’s predictable and preventable; an act of terror is not. The blue states suffered the most and continue to be victimized. We won’t be able to afford to protect our homes and businesses. Our employers and our municipalities could be bankrupted by another event. Go back to the board boys, you got it wrong.
This is not a matter of whether the Administration understands the current terrorism risk, because they do. The real factor behind this recommendation is money. Lobbyist from the insurance industry must be working very hard to retain all the rights to control this coverage. With an entire nation under a heighten terrorism alert, it’s easy to imagine the effect it would have on a carrier’s bottom line.
Unbroker — insurance works to protect against risk that can be calculated — that is why war, nuclear, flood – is excluded from policies. Eliminating TRIA will only put insurance companies in a position that they will not write the coverage — well maybe for the sleepy towns in remote areas that are no where near to military bases nor big cities — if states like NY want to force the coverage, then companies will exit the market making it near impossible to find coverage or when coverage found, near impossible to pay for the coverage.
Comments about “measured exposure” are typical industry baloney. When did the industry satisfactorily measure the wind exposure in Florida? Which produced more losses….9/11 or Florida hurricanes?
If NY got hit again all of NY doesn’t get hit, so a new loss again would pale when compared to other catastrophy exposures the insurance industry already finds ways to handle.
You gotta be kidding! There’s NO WAY the industry can calculate the cost of insuring a mega terrorist event. And the industry has been lobbying hard and expending huge amounts of money to convince the Administration and Congress to renew TRIA. Haven’t you been reading the papers? Even Majority Leader DeLay said that Congress and the government don’t want to continue the program due to the DEFICIT, which means that if they fail in their job to protect this great country, they don’t want the cost coming out of their hide and threatening their re-election chances. TRIA has essentially operated at no cost for the past 3 years. If TRIA isn’t renewed, you’ll see the terrorism market dry up, which will result in businesses curtailing their plans for growth, which will lead to a slowdown in new jobs created, which will THEN lead to a loss in expanding the economy, which will lead to a loss in income for our industry. You really think our industry wants THAT?
The insurance industry needs to take a step back from the politics of this. In risk terms it is a stupid decision, but it is a political not insurance decision.
Now the industry will bring in terrorism exclusions from Jan 1 and the reinsurance industry will continue to avoid terrorism risks. The result will be a shortfall in available terrorism coverage – that is not a problem for insurers, but for insureds, who can then take the matter up with their politicians.
In the meantime we will all be relieved from having to get meaningless TRIA acceptance / rejection forms on every small commercial / GL / professional risk, with a huge resultant saving in costs, time and paper usage. No longer will we have to decline to bind a risk because of the lack of a TRIA form. Yippee for all the assistants out there whose lives will now be so much easier. We can all get on with the job of writing the risks in the way we wish to, not as the government dictates.
And those who want terrorism covered in TRIA form or as a Pool can go lobby the government next year. It is not (apart from Comp insurers) an insurance problem – it’s political and if we as an industry could keep out of the lobbying, we will do ourselves a lot of good.
I know I am probably asking an impossible question to answer,but what is the Treasury Department thinking? Obviously they have forgotten the devastation that was prevalent In the Commercial Real Estate Market when the cost of terrorism coverage was so prohibitive, and no lending institution would close a property deal without terrorism coverage. There is no doubt if TRIA or some other similar legislation is not renewed or enacted there is going to be a negative impact on the economy. There will be a slow down of growth in the Real Estate Sector, and I am sure other companies with terrorism coverage are not going to absorb this cost without passing it on to the end users (consumers). Is it possible that the failure to renew TRIA or similar legislation will be the trigger that leads us into recession? I believe very strongly if this recommendation by The Treasury Department is followed by Congress it is going to have large tenacles that will effect our economy for much longer than they realize.
Thanks Insurance Guys & Gals, learned a lot reading all your comments. We write only small business package, W/C, Health and Bonds, only issued one policy with Torrorism coverage. That one policy was forced on the client by AIG at a 3% rate.
Walking in our clients shoes its easy to understand why they reject this coverage. In places like New York, Boston, Philly & LA perhaps it makes sense. Please explain to me why we should be selling Terrorism insurance.
From a selfish standpoint, we will not miss all of the unnecessary paperwork as very few of our insureds bought TRIA. But Mr. Snow needs to visit with the Federal Flood Insurance people to find out what will happen with no Federal Reinsurance program available for Terrorism.
All the arguments have their merits and their flaws. Bottom line is should the gov stay in this? When 9-11 occured it added to the hard market. The Gov stepped in to prop it up and to give confidence to the financial markets. In 2005 the Insurance market is making money and going into a soft market cycle. The Gov is saying “Ok you guys are doing ok we’ll see ya latter. If something happens we’ll be back”
All this theory about messuarble and controlable, blah ba balh ba blah is beside the point. You won’t be able to buy coverage in NY. It will be unafordable. Well then the Gov will have to step back in won’t they. It’s called Workings of a free market, supply and demand.
VFC – using your logic — let business go down, stop loans and construction wait 6 months for congress to start TRIA back up again — what’s the problem? For the people that lose their jobs, for the business that can’t get loans or lose the loans that they have and put their business in jepordary — this is a big deal, and they don’t know that a train is coming for them. You are right – this is free enterprise and most carriers are not going to offer this coverage.
Absolutely, there are risk to every element of life. If we follow your logic the Gov better get involved all over the place. It better bail out GM they are going to boot 25,000 emplyees.
Insurance is still in the private sector. It makes money and will continue to do so. Wether the Gov prop things up through TRIA or steps in after the problem like it does through the end is the same.
Wether the buildings are rebuilt by TRIA dollars or FEMA dollars or just general funds dollars they will be rebuilt. But people will loose jobs none the less so stop with the loosing jobs and the sky is falling.
I opposed the bail out of Chrysler, the Airlines etc. The airlines are still a mess and not getting better. and the US car makers are obviously not in good shape.
I read the varied responses to the TRIA situation and I cannot agree with those who say the federal government should bail out of the program. The Constitution charges the government with the protection and welfare of our people and what better way to accomplish this mission than with an industry-subsidized backstop as opposed to a pure federal handout? (Remember that TRIA coverage was not a “freebie”.) Moreover the terrorism threat is almost like the threat of attack by a foreign nation, only more insidious. If the government bails out of TRIA it will leave an unimaginably difficult exposure for private insurers to assess and rate, not to mention the related economic damage from lenders who won’t finance projects or real estate deals without it.
Leave it to our “wise” leaders in Washington. They have time to pass private laws to prevent disconnection of feeding tubes, but don’t get the big picture of the terrorism insurance issue.
If they withdraw this reinsurance,all insurers are going to redline terrorism target cities. NY will be especially hard hit because it has so many targets and won’t allow insurers to exclude terrorism or ensuing damage.
First, It is clear that the administration knows NOTHING about securring coverage in New York (Terrorism USA). Second, I can’t beleive how the administration can compare ecenomic conditions as the rational to not renew the act. The administration loves to use 9/11 as thier reasons for their core agenda, however they have NO Clue as to how this affects insured’s and property owners in New York. They need to get their head OUT OF THE SAND. TRIA is important and needs to be renewed.
I’m not sure that the administration has looked at all angles realtive to TRIA. The larger question should be, is the industry ready to go it alone on the issue of terrorism coverage. To cite the economic condition of the country is only a small area to look at when answering this question. In short, TRIA needs to be continued.
The Federal Govt is going to be on the hook for TRIA whether they recognize it or not. Insurers can use the “acts of war” clause to exclude coverage next time. The Gov’t can then decide to either step in (declare a state of emergency or something) or let the economy collapse completely.
Just because the Gov’t knows that its liable for something, doesn’t mean that it wants to admit liability. Take a look at how its financing its “Operations” (Congress never declared war) in Iraq and Afghanistan — not part of the Pentagon budget but as “special appropriations.”
After reading the feedback, I felt compelled to offer what appears to be a minority view:
TRIA is not reinsurance, it is a government subsidy made necessary by the devastation of September 11. Although the ultimate cost of this subsidation is ultimately passed back to the taxpayers, consider the notion that government involvement in private industry should be reserved for times of great emergency only.Continuing TRIA does not encourage the entreprenurial spirit that is a pillar of our industry.
“…and would expose the American taxpayer to excessive and inappropriate costs.”?! How about those people who milk FEMA and then rebuild on the waterfront decade after decade? That’s predictable and preventable; an act of terror is not. The blue states suffered the most and continue to be victimized. We won’t be able to afford to protect our homes and businesses. Our employers and our municipalities could be bankrupted by another event. Go back to the board boys, you got it wrong.
This is not a matter of whether the Administration understands the current terrorism risk, because they do. The real factor behind this recommendation is money. Lobbyist from the insurance industry must be working very hard to retain all the rights to control this coverage. With an entire nation under a heighten terrorism alert, it’s easy to imagine the effect it would have on a carrier’s bottom line.
Unbroker — insurance works to protect against risk that can be calculated — that is why war, nuclear, flood – is excluded from policies. Eliminating TRIA will only put insurance companies in a position that they will not write the coverage — well maybe for the sleepy towns in remote areas that are no where near to military bases nor big cities — if states like NY want to force the coverage, then companies will exit the market making it near impossible to find coverage or when coverage found, near impossible to pay for the coverage.
Comments about “measured exposure” are typical industry baloney. When did the industry satisfactorily measure the wind exposure in Florida? Which produced more losses….9/11 or Florida hurricanes?
If NY got hit again all of NY doesn’t get hit, so a new loss again would pale when compared to other catastrophy exposures the insurance industry already finds ways to handle.
You gotta be kidding! There’s NO WAY the industry can calculate the cost of insuring a mega terrorist event. And the industry has been lobbying hard and expending huge amounts of money to convince the Administration and Congress to renew TRIA. Haven’t you been reading the papers? Even Majority Leader DeLay said that Congress and the government don’t want to continue the program due to the DEFICIT, which means that if they fail in their job to protect this great country, they don’t want the cost coming out of their hide and threatening their re-election chances. TRIA has essentially operated at no cost for the past 3 years. If TRIA isn’t renewed, you’ll see the terrorism market dry up, which will result in businesses curtailing their plans for growth, which will lead to a slowdown in new jobs created, which will THEN lead to a loss in expanding the economy, which will lead to a loss in income for our industry. You really think our industry wants THAT?
The insurance industry needs to take a step back from the politics of this. In risk terms it is a stupid decision, but it is a political not insurance decision.
Now the industry will bring in terrorism exclusions from Jan 1 and the reinsurance industry will continue to avoid terrorism risks. The result will be a shortfall in available terrorism coverage – that is not a problem for insurers, but for insureds, who can then take the matter up with their politicians.
In the meantime we will all be relieved from having to get meaningless TRIA acceptance / rejection forms on every small commercial / GL / professional risk, with a huge resultant saving in costs, time and paper usage. No longer will we have to decline to bind a risk because of the lack of a TRIA form. Yippee for all the assistants out there whose lives will now be so much easier. We can all get on with the job of writing the risks in the way we wish to, not as the government dictates.
And those who want terrorism covered in TRIA form or as a Pool can go lobby the government next year. It is not (apart from Comp insurers) an insurance problem – it’s political and if we as an industry could keep out of the lobbying, we will do ourselves a lot of good.
I know I am probably asking an impossible question to answer,but what is the Treasury Department thinking? Obviously they have forgotten the devastation that was prevalent In the Commercial Real Estate Market when the cost of terrorism coverage was so prohibitive, and no lending institution would close a property deal without terrorism coverage. There is no doubt if TRIA or some other similar legislation is not renewed or enacted there is going to be a negative impact on the economy. There will be a slow down of growth in the Real Estate Sector, and I am sure other companies with terrorism coverage are not going to absorb this cost without passing it on to the end users (consumers). Is it possible that the failure to renew TRIA or similar legislation will be the trigger that leads us into recession? I believe very strongly if this recommendation by The Treasury Department is followed by Congress it is going to have large tenacles that will effect our economy for much longer than they realize.
Thanks Insurance Guys & Gals, learned a lot reading all your comments. We write only small business package, W/C, Health and Bonds, only issued one policy with Torrorism coverage. That one policy was forced on the client by AIG at a 3% rate.
Walking in our clients shoes its easy to understand why they reject this coverage. In places like New York, Boston, Philly & LA perhaps it makes sense. Please explain to me why we should be selling Terrorism insurance.
From a selfish standpoint, we will not miss all of the unnecessary paperwork as very few of our insureds bought TRIA. But Mr. Snow needs to visit with the Federal Flood Insurance people to find out what will happen with no Federal Reinsurance program available for Terrorism.
All the arguments have their merits and their flaws. Bottom line is should the gov stay in this? When 9-11 occured it added to the hard market. The Gov stepped in to prop it up and to give confidence to the financial markets. In 2005 the Insurance market is making money and going into a soft market cycle. The Gov is saying “Ok you guys are doing ok we’ll see ya latter. If something happens we’ll be back”
All this theory about messuarble and controlable, blah ba balh ba blah is beside the point. You won’t be able to buy coverage in NY. It will be unafordable. Well then the Gov will have to step back in won’t they. It’s called Workings of a free market, supply and demand.
VFC – using your logic — let business go down, stop loans and construction wait 6 months for congress to start TRIA back up again — what’s the problem? For the people that lose their jobs, for the business that can’t get loans or lose the loans that they have and put their business in jepordary — this is a big deal, and they don’t know that a train is coming for them. You are right – this is free enterprise and most carriers are not going to offer this coverage.
Absolutely, there are risk to every element of life. If we follow your logic the Gov better get involved all over the place. It better bail out GM they are going to boot 25,000 emplyees.
Insurance is still in the private sector. It makes money and will continue to do so. Wether the Gov prop things up through TRIA or steps in after the problem like it does through the end is the same.
Wether the buildings are rebuilt by TRIA dollars or FEMA dollars or just general funds dollars they will be rebuilt. But people will loose jobs none the less so stop with the loosing jobs and the sky is falling.
I opposed the bail out of Chrysler, the Airlines etc. The airlines are still a mess and not getting better. and the US car makers are obviously not in good shape.
I read the varied responses to the TRIA situation and I cannot agree with those who say the federal government should bail out of the program. The Constitution charges the government with the protection and welfare of our people and what better way to accomplish this mission than with an industry-subsidized backstop as opposed to a pure federal handout? (Remember that TRIA coverage was not a “freebie”.) Moreover the terrorism threat is almost like the threat of attack by a foreign nation, only more insidious. If the government bails out of TRIA it will leave an unimaginably difficult exposure for private insurers to assess and rate, not to mention the related economic damage from lenders who won’t finance projects or real estate deals without it.