You would think that renewing federal reinsurance protection forterrorism risks in the short term, and establishing a permanentbackup facility of some sort for the long-run, would be ano-brainer, given the potential severity and lack of predictabilityof the exposure involved. But then again, there is so little brainpower, guts or political will in Washington these days that it's nosurprise Uncle Sam is once again considering leaving the insuranceindustry in the lurch on this horrific risk.

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

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The word on the street is that the report on terrorism coveragebeing prepared by the Presidents Working Group on FinancialMarketsdue out Saturday, after Congress goes home to campaign, sono one will hear about it or pay much attentionwill somehowconclude that the private market can handle terrorism risks on itsown.

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

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The GAO weighed in this week, but their myopic report seemed toindicate that perhaps federal terrorism reinsurance should belimited to nuclear, biological, chemical and radiological attacksasif a plane flying into a major commercial building, killing andinjuring thousands, is just a routine exposure for private insurersto anticipate and cover.

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Washington is clueless about the risk of terrorism. Lawmakersand bureaucrats dilly-dally about securing our ports, nuclearplants, water supplies and transportation hubs. They hand outhomeland security grants like political pork, rather than based onsound risk management considerations.

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

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

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It is incredible to say this, but the best-case scenario for theinsurance industryat least as far as terrorism goes–might be thatDemocrats take over the Senate and name Hillary Clinton majorityleader. At least Hillary recognizes that a lack of terrorisminsurance would be a national security concern, as she hasrepeatedly stated.

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All those Republicans who self-righteously insist that theAmerican people can only trust them to defend the country againstthe terrorist menace, should stop their political posturing andactually do something to defend the economic security of the UnitedStates by putting in place a permanent terrorism reinsurancefacility.

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

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What do you think the best way is to insure terrorismrisks???

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