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-APIf 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