BIG “I” SUPPORTS LONG-TERM SOLUTION FOR TERRORISM INSURANCE
Discusses market conditions and reiterates support of long-term solution to ensure availability for catastrophic terrorism risk coverage
WASHINGTON, D.C., July 25, 2006—The Independent Insurance Agents & Brokers of America (the Big “I”) submitted Congressional testimony today in support of a long-term solution for terrorism insurance after the expiration of the Terrorism Risk Insurance Extension Act (TRIEA) on Dec. 31, 2007.
In its testimony for the Oversight & Investigations and Intelligence, Information Sharing and Terrorism Risk Assessment subcommittees, the Big “I” offered its views on the current market conditions for terrorism insurance and the need for a long-term solution, including:
- Lack of a viable reinsurance market
- Difficulty in calculating risk
- Impediments to a free-market response
- The need to increase take-up rates and decrease government exposure and
- The unique characteristics of chemical, nuclear, biological, and radiological (CNBR) risk
The Big “I” expressed concern that consumers will face sunsets and exclusion clauses in policies as TRIEA nears expiration without a long-term solution that addresses these issues. Specifically, IIABA highlighted its findings that there is only a limited amount of private-sector terrorism reinsurance is available; that the unique and unpredictable nature of terrorist attacks makes it difficult for insurers to calculate risks; that the current marketplace for terrorism insurance is imperfect; that ways of encouraging greater take-up risks need to be explored to expand capacity and risk-spreading capability; and that chemical, nuclear, biological, or radiological (CNBR) attacks can vary so widely in their effects that there is an inability to predict with any certainty or probability the severity of such an event.
“The issue of terrorism risk insurance has too many variables to assess with the accuracy needed to provide effective private coverage,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “It remains virtually impossible to determine when or where an attack may occur, or how serious it will be in terms of its effects, and these facts continue to make it extremely difficult for the insurance marketplace to provide adequate coverage for such an event.”
“We must be realistic about the capabilities and restraints of the market, while discussing long-term solutions that address them,” says Brendan Reilly, Big “I” assistant vice president for federal government affairs. “These issues need to be examined now in order to explore long-term solutions that will protect consumers and our overall economy after TRIEA expires.”
Founded in 1896, 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, health, employee benefit plans and retirement products. Web address: www.independentagent.com.