Brokers: Keep TRIA Going
NU Online News Service, March 30, 3:20 p.m. EST?Of the nation's major insurance brokerage firms, 80 percent feel that the federal Terrorism Risk Insurance Act should be extended when it expires at the end of 2005, even though interest in the product is low among their clients, according to an association survey.[@@]
The Washington, D.C.-based Council of Insurance Agents & Brokers, which released the survey, said few clients are buying the coverage. Of the 126 respondents, half said that fewer than 20 percent of their clients are buying the federally backed terrorism coverage.
Brokers attributed their clients' low interest in the coverage primarily to its high cost and to their clients' belief that they are not likely to be targets of terrorism.
Brokers who want to see TRIA continue, however, expressed concern that if the program were allowed to expire, the properties that need the coverage the most would be unable to find it.
About 70 percent of the respondents said they thought terrorism coverage was more available now than it was a year ago. In part, they credited this to the fact that there has not been another attack in the U.S. like that on Sept. 11, 2001.
Ken A. Crerar, president of CIAB, said the survey shows that the insurance marketplace is being driven more by the requirements of law than by any greater capacity for terrorism coverage.
"Because negotiations over renewals for large accounts typically begin several months before the policy renewal date, we could start seeing the impact of the expiration of TRIA as early as this fall for January 2005 renewals," Mr. Crerar said.
He noted that when evaluating a TRIA extension, lawmakers need to realize "that some carriers may choose not to renew a yearly contract on a high-profile property if it means that for a short period of time there would be no federal protection in the event of a terrorist act."
Responding to the CIAB survey, a number of brokers noted that in the case of domestic acts of terrorism only limited coverage is available and is often linked with a client buying TRIA coverage. TRIA does not cover acts of domestic terrorism. Stand-alone domestic coverage is usually available only for smaller to medium-sized risks, the brokers said.
If insurance carriers were no longer required by federal law to offer terrorism coverage, the brokers said it was unclear how readily available the coverage would be.
Asked what types of properties and what regions of the country are considered the highest risks for acts of terrorism, brokers cited: major metropolitan areas; high-profile and trophy buildings; major landmarks; government buildings; nuclear power and petrochemical plants; bridges; modes of public transportation; and large resort centers, stadiums, amusement and entertainment venues that draw big crowds.
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