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June 18th, 2004, 09:08 PM
Terrorism insurance extended through 2005

By Christine Dugas
June 18, 2004

The Treasury Department said Friday that it is extending a provision of the Terrorism Risk Insurance Act that requires commercial property and casualty insurers to make terrorism coverage available.

The act, passed by Congress in November 2002, created a three-year program in which the federal government shares in the cost of a foreign terrorist attack that produces at least $5 million in insured losses. In return, insurers were required to offer terrorism coverage on commercial policies, but only through the end of the year.

The act mandated that Treasury decide by Sept. 1 whether to extend the coverage requirement through the end of 2005. The agency opted to make the decision now to avoid uncertainty.

"The terrorism risk insurance program has been an important confidence builder as this country recovered from the attacks of Sept. 11 and the recession," Treasury Secretary John Snow told the Nevada Hotel and Lodging Association in Las Vegas today. The extension will ensure that "there's no changing of the rules in the middle of the game."

Before the Sept. 11 attacks, terrorism coverage was included in standard commercial property and casualty coverage. Insured losses from the attacks are estimated at $32.5 billion.

The industry was able to absorb the Sept. 11 claims but said that it did not have unlimited resources to handle future terrorist attacks of unknown magnitude.

In the aftermath of the attacks, many insurers were unwilling to provide terrorism coverage to businesses. The law made terrorism coverage available, but only about 20% of commercial property and casualty policyholders have purchased it, says Robert Hunter, director of insurance for the Consumer Federation of America.

Most of the companies purchasing terrorism coverage are in high-risk metropolitan areas, such as New York and Washington, D.C. Companies that have passed on the coverage generally believe they won't be a victim of a terrorist attack or believe Congress will bail them out if they are, Hunter says.

A recent report from insurance broker Marsh Inc. found that in recent months, the proportion of businesses purchasing terrorism coverage has increased. In addition, rates on terrorism insurance dropped by 42% in the second half of 2003, it said.

The insurance industry already is lobbying Congress to extend the program after it expires next year. The law mandates that Treasury conduct a study this year and present the results and a recommendation on the program's future to Congress by June 2005.

Standard homeowner's insurance includes terrorism coverage and is not affected by the law.

© Copyright 2004 USA TODAY

July 12th, 2004, 11:30 PM
Early Extension of Terror Program Looks Doubtful

(July 12, 2004) -- Capitol Hill lawmakers and White House officials have showed little interest in extending the government's terrorism insurance program far ahead of its expiration date at the end of 2005. Under the program, the federal government serves as the de facto reinsurer for property/casualty policies that cover terrorist acts on the homefront.

Financial services industry professionals are particularly worried that U.S. House Financial Services Committee Chairman Michael Oxley will not lobby for the legislation's renewal on purely ideological and practical grounds. Still, others remain hopeful for the program's future, mostly because Oxley and Senate Banking Committee Chairman Richard Shelby have not come out dead set against it.

The White House, meanwhile, is waiting to see if bipartisan support warrants an extension.

Source: American Banker (07/12/04); Heller, Michele


July 13th, 2004, 09:58 AM
I think we need the Gerber Grow Up Terrorist Insurance Retirement Plan.

We need more insurance in our lives.

May 2nd, 2005, 10:57 AM
May 01, 2005

More terror insurance for other cities

New York lags behind four major U.S. cities in purchasing insurance to cover property losses from terrorism, according to a report from Marsh Inc.

Based on data from 2,371 businesses and government entities, Marsh researchers found that 54% of New York's businesses bought coverage, a lower rate than in Boston (69%); Washington, D.C. (60%); Chicago (58%); and Dallas (57%).