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Big "I" Calls For Terrorism Insurance Solution


Says nation, industry must take additional steps to protect itself from catastrophes


NEW YORK CITY, March 29, 2006—The nation’s largest insurance association called today for the creation of an effective, long-term mechanism to manage the unique risk posed by terrorist attacks.


Independent insurance agent Sharon Emek, Ph.D., CIC, a partner with New York-based CBS Coverage Group, Inc., testified today on behalf of the Independent Insurance Agents & Brokers of America (the Big “I”) before the Terrorism Insurance Implementation Working Group of the National Association of Insurance Commissioners (NAIC).


The purpose of the public hearing was to gather information that will be useful to legislators and insurance regulators in crafting a long-term solution to address insurance coverage for acts of terrorism once the Terrorism Risk Insurance Act (TRIA) has sunset on Dec. 31, 2007.


Emek testified that the new federal backstop will expire in 21 months, and that now is the time to look ahead and identify permanent solutions to the problem posed by the threat of terrorist acts.


In short, the problem is that terrorism risk is unique, and, therefore, it is nearly impossible to predict losses or assess risks in traditional ways. As a result, the insurance industry faces the strong likelihood that, without a meaningful, permanent solution, terrorism coverage will be extremely difficult, if not impossible, to obtain after TRIA expires.


“Given the unique nature of terrorism risk and the industry’s inability to make meaningful assessments or judgments about possible terrorist events, IIABA believes that a private-public partnership—in some form—remains essential to facing this challenge,” Emek testified. “Although some potential solutions might allow for the reduction or even elimination of federal involvement in the years to come, it will certainly be impossible to eliminate such a role in the immediate future.”


Emek noted that the likelihood of unobtainable terrorism insurance after Dec. 31, 2007, would be especially troubling for small- and medium-sized businesses, which are not in a position to self-insure. She also noted that the vast majority of businesses across America are small-to-medium sized, and that the sunset of a federal terrorism backstop could have devastating effects on the nation’s economy.


“My clients—generally small and mid-sized businesses in this region—worry about the impact of terrorist events in this country, and I can assure you that they desire a long-term solution as much as those of us in the agent and broker community,” Emek testified. “They want certainty in their business dealings and operations, and they clearly do not want to be subject to an on-again, off-again terrorism insurance mechanism. Terrorism is perhaps the greatest threat to our nation’s economic future, and ignoring the reality of the situation is simply not an option.”


Emek told the group that the Big “I” believes it is important to have a thorough review of the alternatives, and called for establishment of a venue where such discussion and debate can occur. She also noted Big “I” support for H.R. 4619, introduced by Rep. Vito Fossella (R-N.Y.) that would establish a Commission on Terrorism Risk Insurance to evaluate an array of possible solutions and recommend options that would build a mechanism for handling terrorism insurance risks while reducing the role of the federal government over time.


Emek also called for any long-term response to eliminate any distinction between domestic and international terrorism, and noted Big “I” support for efforts to allow insurers to proactively build tax-free reserves for terrorist events on a pre-event basis. She closed by noting that even though it has been more than four years since the terrorist attacks of Sept. 11, 2001, such events are still a very real possibility.


“Although our nation has been spared from further events in recent years, the threat of terrorist attack is as great as ever, and our country and industry must take the steps necessary to protect itself from a similar future event,” Emek testified. “As part of that preparation, we must take the steps necessary to protect our national economy, and we must ensure that terrorism insurance is available and affordable to our nation’s businesses.”


Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address:




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Alexandria VA 22314
​phone: 800.221.7917
fax: 703.683.7556

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