Battle lines form over terrorism insurance program’s future

Interest groups are gearing up to lobby over the reauthorization of the federal government's terrorism risk insurance program in advance of a Treasury Department report scheduled to be released by the end of the month that will make recommendations for a long-term fix.

The American Insurance Association, representing major insurance groups, is advocating the federal government assume financial responsibility for all chemical, nuclear, biological and radiological attacks and continue a program similar to the current program for "conventional" attacks.

The Real Estate Roundtable, representing major commercial property owners, is pushing a voluntary system for insurance companies to establish their own pools similar to a system operating in Great Britain.

Congress will be forced to tackle the issue because the current program expires next year. The administration has been skeptical of the program, noting that it has achieved its purpose of stabilizing the insurance market but still carries the potential of a taxpayer bailout. One lobbyist said he is convinced Treasury will advocate a private-market system for terrorism risk.

But Treasury Secretary Henry Paulson was supportive of the program when he served as CEO of Goldman Sachs, and it is still believed to have support within Congress.

In a June 23 letter to the Treasury Department, House Financial Services Financial Institutions Subcommittee Chairman Spencer Bachus, R-Ala., noted there is still a limited amount of private sector terrorism reinsurance available, with only $6 billion to $8 billion to cover foreign acts of terrorism -- a figure that does not include nuclear, biological or chemical attacks.

"Terrorism insurance is unique. And it uniquely requires a private-public partnership, and quite frankly a significant participation by the federal government, which the current program envisions if, God forbid, we ever have an attack," said Leigh Ann Pusey, chief operating officer for the AIA. "We need that partnership in order to get our hands around the risk."

Pusey said her group is not reflexively opposed to a pooling system, but AIA has not been persuaded that such proposals would be able to create capacity for insurers to participate in the market.

"I don't think their proposals are dead in the water. I just don't think they are responsive to real-market dynamic that is going on," she said. "The insurance industry has not tended to run to pools."

Advocates for the Real Estate Roundtable's proposal will be lobbying lawmakers Tuesday in support of the plan, which would create a nonprofit reinsurance company to offer primary insurers coverage for nuclear, biological, chemical and radiological incidents as well as group life.

The system would be primarily funded by insurers and the premiums that they collect, but also might include private insurance, bonds and post-event surcharges.

Jeffrey DeBoer, president and CEO of the Roundtable, said the proposal would "create a layer of private capital between primary insurers and the federal government -- providing continuity to the marketplace so that policyholders could get the coverage they need, while reducing taxpayer potential risk."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.