Federal Backstop Sought For WC Terrorism Losses

Washington

Some of the largest employers in New York City, including AIG and Citigroup, are asking President George W. Bush to support legislation creating a federal backstop for terrorism losses affecting workers compensation insurance.

“Without this kind of federal backstop, workers compensation coverage will quickly become unavailable to large concentrations of employees,” the employers said in their letter to the President.

“Should this acute situation remain unaddressed, our companies will have to make difficult decisions about future employee locations,” the letter said. “This will be inefficient for us, but, more importantly, highly disadvantageous to the future recovery and growth of New York City.”

The letter was signed by AIG Chairman Maurice R. Greenberg and Citigroup Chairman Sanford I. Weill. Others signing the letter include Merrill Lynch Chairman David H. Komansky, Goldman Sachs Chairman Henry M. Paulson Jr., and Verizon President Ivan G. Seidenberg.

The letter comes at a time when legislation creating a broad federal backstop for terrorism-related losses remains stalled in the Senate, largely over the issue of tort reform. In their letter, the employers say that a workers compensation-only backstop is not complicated by the debate over tort reform.

The employers said that the magnitude of potential losses to thousands, if not millions, of employees is impossible for any large employer to absorb or any insurer to insure.

Recent modeling, the letter said, puts these losses, under certain scenarios, in the tens of billions of dollars.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 3, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Federal Backstop Sought For WC Terrorism Losses

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