WASHINGTON–Lawmakers are asking a federal group studying the terrorism insurance marketplace to consider the lack of a reinsurance market for terrorism coverage and other obstacles preventing carriers from assuming terrorism risk.

The call from seven House Republicans came in a letter to the Treasury Department, which leads the President's Working Group on Financial Markets, which is preparing a report for Congress.

They asked for an analysis of five main factors. Besides the reinsurance market they called for a look at the difficulty evaluating terrorism risk; nuclear, chemical, biological and radiological risk issues; the efforts being made to increase the take-up rate for coverage and decrease the government's exposure; and impediments to a free market response.

Those signing the letter include Reps. Pete Sessions, R-Texas; Richard Baker, R-La.; Deborah Pryce, R-Ohio; Sue Kelly, R-N.Y.; Eric Cantor, R-Va.; Vito Fossella, R-N.Y.; and Michael Ferguson, R-N.J.

Charles Symington, senior vice president of government relations for the Independent Insurance Agents and Brokers of America, said the lawmakers' concerns over terrorism risk were justified.

“This letter accurately assesses the state of the marketplace as it relates today to the thorny issue of terrorism risk insurance,” he said. “It is virtually impossible to assess when or where an attack may come, and how much damage it will cause, and this makes it extremely difficult for the insurance marketplace to adequately provide coverage for such an event.”

The President's Working Group is required to conduct its study of the terrorism insurance and reinsurance markets under a provision in the legislation passed late last year, which extended the Terrorism Risk Insurance Act.

Assistant Secretary for Financial Institutions Emil W. Henry Jr. said recently that the group is evaluating dozens of comments on the issue and is working to have its report ready for Congress by a Sept. 30 deadline.

Brendan Reilly, IIABA assistant president for federal government affairs, said the letter raised important questions that should be resolved as quickly as possible as the government examines the terrorism risk issue and what potential role it might play once the TRIA program expires at the end of 2007.

“These questions need to be asked now so that we have the answers if and when we need them,” he said, adding, “Terrorism risk poses a tremendous number of uncertainties, and we need to address those uncertainties as best we can, so that we can find ways to insure against this risk.”

The Treasury Department conducted a survey under the initial TRIA legislation aimed at determining if group life insurance should be included under the program.

That report found that while reinsurance for group life coverage was scarce, primary carriers were willing to write the coverage, thus making its inclusion in the TRIA program unnecessary, Treasury officials concluded.

Special Reports /

Congressmen Pose Questions For TRIA Study

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