Commercial property-casualty insurers in general remain unwilling to provide nuclear, biological, chemical and radiation coverage under the Terrorism Risk Insurance Act due to uncertainties about the exposure and the degree of catastrophic loss, the Government Accountability Office has concluded.

In its report, the GAO said insurers rely on long-standing exclusions for nuclear and pollution risks, “although such exclusions may be subject to challenges in court because they were not specifically drafted to address terrorist attacks.”

Companies that own high-value properties in large cities are among those policyholders who cannot obtain NBCR coverage, GAO's survey found.

At the same time, workers' compensation, group life and health insurers generally provide such coverage because states do not allow them to exclude those risks, GAO said.

The report was mandated by a provision of the Terrorism Risk Insurance Act extension that was enacted into law last December, which extended the federal backstop program through 2015.

Efforts were made to expand the program to mandate specific coverage of NBCR, but a study of the issue was all that made it into the final bill. The study is based on inquiries in six geographic markets: Atlanta, Boston, Chicago, New York, San Francisco and Washington, D.C.

“Without the capacity to reliably estimate the severity and frequency of NBCR attacks, which would be necessary to set appropriate premiums, insurers focus on determining worst-case scenarios, which with NBCR weapons can result in losses that would render insurers insolvent,” the report said.

Special Reports /

Insurers Still Won't Cover NBCR Attacks

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