Regulator Slams ISO Over Terror Projections

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By Steven Brostoff, Washington Editor

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NU Online News Service, Jan. 8, 1:58 p.m. EST,Washington?Washington, D.C.'s top insurance regulator hasunleashed a verbal blast at the Insurance Services Office Inc. forits calculation that his city faces a high risk of terrorism.

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District of Columbia Insurance Commissioner Larry Mirel assailedas "highly speculative" data developed by Jersey City, N.J.-basedInsurance Services Office that would make commercial propertyinsurance rates prohibitive.

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According to the ISO assessment, Mr. Mirel said businesseslocated in D.C. were deemed 100 percent more likely to be targetedfor a terrorist attack than their counterparts just across theborders in Maryland and Virginia.

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ISO provides 1,500 insurers with underwriting, statistical andactuarial services as well as claims information and analyses,consulting and technical services, policy language, informationabout specific locations, fraud-identification tools, and dataprocessing.

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Concerning ISO terrorism projections for Washington, "Theseassumptions are just off-the-wall," Mr. Mirel told NationalUnderwriter.

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If implemented, he said, the price for insurance in D.C. couldbe two-to-three times that in Maryland and Virginia.

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"Who would stay in D.C.?" Mr. Mirel asked.

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Dave Dasgupta, a representative of ISO, emphasized that there isno current dispute between ISO and D.C. ISO, he noted, has not yetfiled rates.

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Rather, Mr. Dasgupta said, ISO has had informal discussions withregulators and is trying to understand their concerns.

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It is, he said, a very complex issue.

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"We don't have a lot of historical data on terrorism risk," Mr.Dasgupta said.

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He added that ISO is under tremendous time pressure to developterrorism insurance rates. Under the recently enacted TerrorismRisk Insurance Act, which creates a federal reinsurance backstopfor losses caused by acts of international terrorism, insurancecompanies must offer terrorism coverage to all commercialpolicyholders by Feb. 24.

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"We are trying to work as quickly as possible to make a filing,"Mr. Dasgupta said.

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