CEO Makes Case For TRIA Extension
NU Online News Service, Nov. 18, 3:03 p.m. EDT?Insurers seeking an extension of the Terrorism Risk Insurance Act should argue that the legislation "is not a handout," and plenty of precedent supports it, the chief executive of Hartford Financial Services told an industry conference.
Ramani Ayer made his comments at a property-casualty executives meeting sponsored by Price WaterhouseCoopers and Standard & Poor's in New York.
The loss of TRIA, which is due to expire Dec. 31, 2005, is a "looming threat" that "hangs over our entire economy," he said.
P-c and workers' compensation insurers' total capacity to handle a terrorism event is $144 billion, according to Insurance Information Institute figures cited by Mr. Ayer.
He noted a Towers Perrin estimate that a Times Square nuclear bomb at midweek would cause an estimated $586 billion p-c and comp loss, leaving a coverage shortfall of more than $400 billion.
Without "a private-public backstop-these losses will drive most, if not all of us into insolvency," he said noting that "reserves cannot be established for future events and private reinsurance is largely unavailable."
Mr. Ayer said he believes the industry has not framed the issue to convince Congress and the public of the need for continuing TRIA.
The argument to make, he said, is that rather than being a "handout," TRIA is analogous to the Federal Deposit Insurance Corporation that, within set limits, guarantees bank deposits against a bank failure. It was, he said, created for "individual depositors and the larger economy, not special interests."
Mr. Ayer said examples of other government "last resort" insurance partnerships include federal flood insurance and the protection Florida provides for hurricanes and California for earthquakes.
Seventy different business organizations support TRIA, he noted.
Congress should be urged to support TRIA, because government's role is to protect life and property, said Mr. Ayer
With public-private terrorism reinsurance, "our industry will be there to help our communities and economy rebuild" after an attack, he said.
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