The American Academy of Actuaries, in response to questionsposed by the President's Working Group on Financial Markets, hassubmitted its analysis on terrorism risk insurance, concluding thata national framework for terrorism risk is necessary if terrorismcoverage is to be widely and readily available.

According to the report, the actuaries were not able to identifyany insurance, reinsurance, or capital market solution that couldfinance such potential insured losses from a large chemical,nuclear, biological or radiological (CNBR) event. With theirsolvency threatened, insurers would be forced to limit theirexposures to loss from a terrorist attack.

“A large CNBR terrorist attack on New York City could causeinsured losses of $778 billion,” said Michael McCarter, chairpersonof the Terrorism Risk Insurance Act subgroup. “Without a nationalframework for managing terrorism risk, insurers would be exposed tolosses far greater than they could sustain, significantly damagingtheir ability to provide the ongoing insurance coverage that isessential to the stability of the entire economy.”

The Academy's analysis will assist the president's working groupas it prepares a report about the long-term availability andaffordability of terrorism insurance. The report is due to Congressby Sept. 30, 2006.