Hope Lives For Terrorism Re Bill In 2002
Washington
What happens both in the world and in the insurance marketplace over the next few weeks will determine whether Congress will seriously revisit the terrorism reinsurance issue when it reconvenes on Jan. 23, industry experts agree.
Rodger Lawson, president of the Alliance of American Insurers in Downers Grove, Ill., said two things could happen that would force Congress to move quickly on terrorism reinsurance. The "horrible scenario," he said, would be if another major terrorist event occurs and people are left without coverage. Congress, he said, would have to acknowledge that it made a terrible mistake by not putting a system in place when it had the chance.
Another possibility, he said, is that one of the major upcoming events, such as the Super Bowl or the Winter Olympics, is affected by a lack of access to terrorism insurance. If that happens, he said, the message will be brought home to members of Congress.
Carl Parks, senior vice president, federal affairs for the National Association of Independent Insurers in Des Plaines, Ill., said the question will be whether major deals are not done because banks will not give loans due to the unavailability of terrorism coverage. If that happens, he said, Congress will probably act, but if not, they probably wont.
Julie Rochman, senior vice president of public affairs with the Washington-based American Insurance Association, said she believes there will be significant market dislocations. AIA, she said, will be right back lobbying Congress to enact legislation as soon as it returns.
Ms. Rochman noted that states are starting to approve terrorism exclusions, but that not every state will do so. Congress will have to step in, she said, if for no other reason than the fact that the states will be doing different things.
Monte Ward, federal affairs director for the National Association of Mutual Insurance Companies in Indianapolis, added that while the disruption in the insurance market has been contained so far, that was only due to the belief that Congress would address the issue before adjourning. "By the time Congress returns in January, the damage will have been done, " Mr. Ward said.
Mr. Lawson said it is possible Congress will decide simply to handle uninsured terrorism losses on a disaster basis, by approving payments after any event. However, he said, that scenario overlooks the value of having a mechanism in place that can respond quickly.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, December 24, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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