Speaking on behalf of the National Association of Insurance Commissioners (NAIC), Michael McRaith, director of the Illinois Division of Insurance, testified this week before the Senate Committee on Banking, Housing, and Urban Affairs on the need for a federal government/private market partnership to insure terrorism risk. McRaith applauded the Committee for holding the hearing early in the legislative session and urged Congress to move quickly to avoid the market disruptions and uncertainty that followed the September 11 terror attacks.
“Acts of terrorism are unpredictable and threaten our nation’s economic health,” McRaith said. “Insuring that risk is an economic imperative that requires a national solution. The private market should be the first line of defense, but a federal terrorism backstop is necessary to assure financial protection from terrorist attacks.”
McRaith’s testimony emphasized the demand for terrorism insurance and the need for federal involvement to ensure that demand is met. It also highlighted the success of the previous federal programs, while suggesting some changes to better serve policyholders and consumers. Among the suggestions were increasing the duration of the program to provide sustained market stability, inclusion of group life insurance, coverage for domestic and foreign acts, and coverage for nuclear, biological, chemical, and radiological (NBCR) events.
“Congress must act to ensure that a partnership between the federal backstop and the private market is in place long before the current program expires,” McRaith said. “The NAIC stands ready to assist Congress in developing and supporting such a partnership.”
Source: National Association of Insurance Commissioners (NAIC)
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