RIMS Lobbies For Congress To Back Terrorism Reinsurance
To The Editor:
The Risk and Insurance Management Society wholeheartedly concurs with the conclusion drawn in NU's Jan. 21 editorial, "California, New York Take Big Risks on Terrorism Policies."
The absence of Congressional action to provide a federal terrorism reinsurance backstop has caused a confusing and potentially dangerous situation–specifically for insurers in New York and California, two of the four states where terrorism exclusions do not exist, as well as for policyholders everywhere who are faced with absorbing nearly all terrorist risk themselves.
The Insurance Services Office's terrorism exclusions in 46 jurisdictions, while necessary to protect the solvency of insurers, have left policyholders, including many RIMS member companies, scrambling for coverage. Assuming they are even able to find terrorism insurance, some companies are forced to endure astronomical premium increases to place even a quarter of the coverage they previously enjoyed.
If another catastrophic terrorist event occurs of similar magnitude to the Sept. 11 attacks, these businesses will not be adequately insured. In fact, the preparation alone for a future attack might result in financial consequences that many businesses are unable to withstand.
Despite inaction by the Senate, RIMS continues to advocate for a terrorism reinsurance bill. In January, RIMS leadership met with General Accounting Office and Treasury officials, as well as staff at the Senate Banking Committee and House Financial Services Committee to relay the details of the economic hardship experienced throughout its membership.
RIMS reiterated its belief that this is, first and foremost, an economic issue. RIMS members shared stories of skyrocketing prices as well as future projects and investments in doubt. However, additional affected companies need to bear witness so that this critical legislation is not shuffled to the bottom of a busy Congressional agenda.
Risk managers, already facing a tough year with the hardening insurance market, recognize that a federal reinsurance mechanism is the only way to provide certainty and stability to the insurance and reinsurance communities. We need to pass this legislation for our companies and for the economy.
David L. Mair
President
Risk and Insurance Management Society
New York, N.Y.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 18, 2002. Copyright 2002 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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