You would think that renewing federal reinsurance protection for terrorism risks in the short term, and establishing a permanent backup facility of some sort for the long-run, would be a no-brainer, given the potential severity and lack of predictability of the exposure involved. But then again, there is so little brain power, guts or political will in Washington these days that it's no surprise Uncle Sam is once again considering leaving the insurance industry in the lurch on this horrific risk.

The entire week was taken up with studies, hearings, press conferences and public statements about whether or not the federal government needs to provide some sort of reinsurance backstop for terrorism risks beyond TRIAs expiration at the end of next year. Ive never heard so much debate about what appears to me to be an open-and-shut question. The country needs federal insurance protection in the “war” on terrorism, period!

The word on the street is that the report on terrorism coverage being prepared by the Presidents Working Group on Financial Marketsdue out Saturday, after Congress goes home to campaign, so no one will hear about it or pay much attentionwill somehow conclude that the private market can handle terrorism risks on its own.

If this turns out to be accurate, that would be about as crazy as White House contentions that the war in Iraq is not worsening the risk of another terrorism attack in the first place!

The GAO weighed in this week, but their myopic report seemed to indicate that perhaps federal terrorism reinsurance should be limited to nuclear, biological, chemical and radiological attacksas if a plane flying into a major commercial building, killing and injuring thousands, is just a routine exposure for private insurers to anticipate and cover.

Washington is clueless about the risk of terrorism. Lawmakers and bureaucrats dilly-dally about securing our ports, nuclear plants, water supplies and transportation hubs. They hand out homeland security grants like political pork, rather than based on sound risk management considerations.

Its really an outrage how inept our federal government is in dealing with this threat. Congress and the White House make the three monkeys of see no evil, hear no evil, speak no evil infamy seem like the Three Wise Men by comparison!

I have no doubt no matter who says what about terrorism exposures, this debate will go down to the wire again next year, with a lot depending on who is running Congress.

It is incredible to say this, but the best-case scenario for the insurance industryat least as far as terrorism goes–might be that Democrats take over the Senate and name Hillary Clinton majority leader. At least Hillary recognizes that a lack of terrorism insurance would be a national security concern, as she has repeatedly stated.

All those Republicans who self-righteously insist that the American people can only trust them to defend the country against the terrorist menace, should stop their political posturing and actually do something to defend the economic security of the United States by putting in place a permanent terrorism reinsurance facility.

In future weeks, Ill address the various proposals that have been floated, but for now Ill take a straight renewal of TRIA as is, before its too late.

What do you think the best way is to insure terrorism risks???

Special Reports /

TRIA Renewal Is A No-Brainer!

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