Future cloudy for terrorism insurance

WASHINGTON - Terrorism insurance has become increasingly common and affordable five years in the US after September 11.

But that market has only emerged with the federal government's

pledge to serve as an insurer of last resort - assistance that is

tenuous, and guaranteed only through the end of 2007.

If Congress decides the government has no business helping

private insurers absorb terrorism losses, advocates seeking a

continued government role warn coverage may revert back to what it

was just after 9/11 - hard to find, expensive, and out of reach for

most property owners.

 

"Without some sort of federal support in place, we will have a

return to the dysfunctional market we had before," said Martin

DePoy, a spokesman for the Coalition to Insure Against Terrorism, a

Washington-based group representing property owners in industries

such as real estate, retail and entertainment.

 

At issue is the Terrorism Risk Insurance Act, which took effect

in November 2002 after insurers' costs from the September 11

attacks climbed to an estimated US$32 billion.

 

Losses and fear of more attacks prompted most mainstream

carriers to begin excluding terrorism from property insurance

policies that had generally included coverage before the

attacks.

 

While some insurers continued writing their own stand-alone

terrorism policies without federal backup, the government agreed to

reimburse insurers up to US$100 billion under the so-called TRIA

law should foreign terrorists strike again - a pledge criticised by

some as an unwarranted favour to the industry.

 

The federal guarantee doesn't apply in case of domestic

terrorism.

 

The law had been due to expire at the end of last year.

 

But Congress extended TRIA through 2007, in the hope that the

United States government and industry could find a permanent

solution that keeps the terrorism insurance market viable while

reducing the federal role.

 

The market has steadily grown since TRIA was enacted, according

to a study by Marsh & McLennan Companies Inc.'s risk and

insurance services subsidiary, Marsh Inc.

 

Nampa-AP

 

If Congress decides the government has no business helping private

insurers absorb terrorism losses, advocates seeking a continued

government role warn coverage may revert back to what it was just

after 9/11 - hard to find, expensive, and out of reach for most

property owners."Without some sort of federal support in place, we

will have a return to the dysfunctional market we had before," said

Martin DePoy, a spokesman for the Coalition to Insure Against

Terrorism, a Washington-based group representing property owners in

industries such as real estate, retail and entertainment.At issue

is the Terrorism Risk Insurance Act, which took effect in November

2002 after insurers' costs from the September 11 attacks climbed to

an estimated US$32 billion.Losses and fear of more attacks prompted

most mainstream carriers to begin excluding terrorism from property

insurance policies that had generally included coverage before the

attacks.While some insurers continued writing their own stand-alone

terrorism policies without federal backup, the government agreed to

reimburse insurers up to US$100 billion under the so-called TRIA

law should foreign terrorists strike again - a pledge criticised by

some as an unwarranted favour to the industry.The federal guarantee

doesn't apply in case of domestic terrorism.The law had been due to

expire at the end of last year.But Congress extended TRIA through

2007, in the hope that the United States government and industry

could find a permanent solution that keeps the terrorism insurance

market viable while reducing the federal role.The market has

steadily grown since TRIA was enacted, according to a study by

Marsh & McLennan Companies Inc.'s risk and insurance services

subsidiary, Marsh Inc.Nampa-AP

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