The Independent Insurance Agents & Brokers of America (the Big “I”) said it strongly supports H.R. 4314, the Terrorism Risk Insurance Revision Act, introduced late Monday by Subcommittee Chairman Richard Baker (R-La.).
A new backstop is needed to help insure against catastrophic terrorism losses in place of the Terrorism Risk Insurance Act (TRIA), which expires Dec. 31. The bill extends the needed federal backstop to help insurers cover catastrophic terrorist acts while helping the insurance market develop the risk capacity it will need when federal involvement is eventually phased out.
“The Big ‘I’ has consistently supported the continuation of the current terrorism insurance backstop or a modified one for one reason – to protect our business customers and their employees,” said Big “I” CEO Robert Rusbuldt. “At this time, there is no viable market for terrorism insurance, so we need to have a way to protect the businesses of America, our workforce, and the economy of our nation. Chairmen Baker and Oxley understand the need for this bill, and Chairman Baker has done an excellent job in putting together a proposal that will help provide economic security for our nation against a terrorist attack.”
“We are glad that Chairman Baker’s bill, if it becomes law, will ensure terrorism insurance is not only made available, but also more affordable for the consumers our members serve,” added Charles Symington Jr., Big “I” senior vice president for government affairs and federal relations.
The Big “I” 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 coverage altogether in some states that do not allow exclusions for terrorism coverage. IIABA’s focus is on insurance consumers, and it said it knows that many of the business customers of independent agents need this coverage.
“It is very important that this bill recognizes the potential for terrorist attacks to take place at any place and any time, and puts forth reasonable trigger levels that are important to agents in large and small communities across America,” said Symington. “We support the chairman’s efforts and thank him, and his colleagues, for their diligent work.”
In addition to extending the federal backstop on a short-term basis, the bill helps address the long-term need for coverage. It will encourage risk-sharing mechanisms and authorize capital-reserve accounts that will help the market increase its own capacity and phase out federal involvement eventually. A public-private, nine-member commission and several studies are proposed in the bill, including a Big “I”-supported natural-disaster study, and the legislation would require consultation with independent insurance agents and brokers.
“The risk-sharing mechanisms envisioned in Chairman Baker’s bill are important provisions that will move the insurance industry toward a long-term, private solution,” said Brendan Reilly, Big “I” director of federal government affairs. “We are pleased the legislation calls for consultations with independent insurance agents and brokers, who are on the front lines of this issue as they serve their commercial customers.”
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