The Independent Insurance Agents & Brokers of America expressed both cautious optimism and concern over Administration comments regarding a federal backstop for terrorism insurance.
The Terrorism Risk Insurance Act is set to expire Dec. 31, and Congress has been waiting for the results of a Treasury Department study before deciding whether to renew it. The Treasury analysis was released yesyerday.
The Big “I” said it is concerned about the tone of Treasury Secretary John Snow’s statement, in which the Administration laid down parameters within which renewed legislation should fall.
“Agents and brokers serve as valuable professional trusted advisors between consumers and insurers, and we believe that the Administration’s comments suggest that there is an appropriate federal role to ensure a workable insurance marketplace in the event of terrorism losses,” said Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “However, some of the Treasury conclusions may be more wishful thinking than business reality. We must ensure that we have markets for our business customers.”
He maintained that with the risk of catastrophic attacks on U.S. soil still very real, and the capability of both insurers and reinsurers to offer comprehensive terrorism coverage still very limited, the Big “I” continues to push for the extension of a federal backstop by Congress.
The Big “I” has supported the continuation of the current terrorism insurance backstop or a modified one, and it has noted in testimony before Congress that action is needed as soon as possible, since businesses and insurers are starting to make decisions that impact operations beyond the expiration of TRIA.
Th association also noted that the availability and affordability of terrorism insurance is a business customer problem throughout the nation. In fact, take-up rates under TRIA have continued to grow across the country, and IIABA members have seen terrorism coverage purchased by a variety of interests, from small towns in Mississippi to small and large businesses in New York City.
IIABA said it does not want its business customers to be in a position of having insurers exclude terrorism coverage, or having insurers stop writing certain commercial coverages altogether in some states that do not allow exclusions for terrorism coverage.
“The Big ‘I’ and our 300,000 insurance agents and brokers hope that policymakers will draw on the experiences of the current program in crafting a mechanism that will better serve consumers and protect our economic security, and we urge members of Congress to move forward now and pass legislation to ensure a federal backstop for acts of terrorism,” says Brendan Reilly, Big “I” director of federal government affairs.
“While we disagree with a number of the conclusions in the report, we believe the Treasury Department’s analysis indicates that there is a role for the federal government to play in the terrorism insurance marketplace to ensure the availability of adequate levels of insurance to allow businesses across America to continue operating and growing, and preserving jobs in the process,” Symington said.
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