BIG “I” SEEKS CONTINUED FEDERAL ROLE IN TERRORISM INSURANCE
New York agent testifies before House subcommittees on necessity of federal action
WASHINGTON, D.C., Sept. 27, 2006—A continued federal role is needed to ensure the availability of terrorism risk insurance, and it is essential for the federal government to look ahead now, before backstop legislation expires, the Independent Insurance Agents & Brokers of America (the Big “I”) said today.
Sharon Emek, chair of the board of the Independent Insurance Agents & Brokers of New York (IIABNY) and an independent agent, made this case in testifying today before two key House Financial Services Committee subcommittees. She said that terrorism risk coverage would become inordinately expensive and less available to businesses, particularly smaller ones, if the federal role lapses.
“It is crucial that all businesses have access to affordable insurance to protect them from this risk, and I personally have seen what can happen if they do not,” Emek testified. “In fact, after 9/11, a number of my friends had to close their businesses because they did not have sufficient business interruption coverage. Imagine how many businesses would go out of business without any business interruption coverage at all. Without a federal role for terrorism insurance, business interruption insurance will be further strained.”
Emek commended Congress for passing the Terrorism Risk Insurance Act (TRIA) in 2002 and its extension in 2005, and noted that the legislation has been beneficial to business and job growth.
“The federal backstop created by these laws has worked well and ensured that terrorism insurance is available and more affordable,” Emek testified. “It has allowed businesses to continue operating and growing, and preserved jobs at virtually no cost to the federal government. As a result of your work, prices have come down, capacity has grown, and demand is up in many geographic areas. The program has also calmed uncertainty in the market and helped address the exclusions in policies and outright cancellations of coverage that would have resulted if it were not enacted in 2002 and extended in 2005.”
But Emek noted that TRIA is scheduled to expire Dec. 31, 2007, and warned that large and small businesses across America could find themselves without affordable coverage when the legislation comes to an end.
“Based on our members’ experience in the market, we would like to stress that this is not just a big city or a big business problem,” Emek said. “Policyholders across the country demand coverage. We have seen terrorism coverage purchased everywhere—from small towns in Mississippi to small and large businesses in New York City. It is truly a national issue.”
Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations, pledges the Big “I” will keep working to secure a continued federal role in terrorism risk insurance.
“Congress did the right thing, and the smart thing, in 2005 by extending TRIA,” Symington says. “We appreciate its leadership on this issue. We hope that Congress will continue to show foresight and see that a federal role is essential to guard against terrorism risks—especially nuclear, biological, chemical and radiological attacks, which the Government Accountability Office (GAO) has found to be effectively uninsurable. We will keep working to help find a solution that will keep a federal backstop in place.”
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: www.independentagent.com.