Coalition sets goals for federal terrorism insurance backstop
The Coalition to Insure Against Terrorism, representing the American Insurance Association and companies such as Hilton Hotels Corp. and Marriott International, released its proposal Monday for reauthorizing the federal backstop for terrorism risk insurance, which expires at year's end. The two groups argue that the program should cover losses from a nuclear, biological, chemical or radiological attack above an insurer's retention level.
Insurance groups contend there is no market to write such policies because of the potential liabilities from those attacks. The group also called for eliminating insurer deductibles and co-payments for such nuclear, biological, chemical and radiological attacks as well.
The coalition paper also calls for a permanent extension of the program, the inclusion of acts of domestic terrorism and a trigger no higher than the current $100 million level for federal reimbursement. The outline will serve as the business community's main stance as Congress gears up to tackle reauthorization.
The House Financial Services Capital Markets Subcommittee will hold a hearing on the program Tuesday.
"We believe that consensus between two major stakeholders in the debate over how to structure renewal of [the program] represents an important step forward, which will hopefully inform the discussion among policymakers," said Martin DePoy, coordinator of CIAT's steering committee.
Some lawmakers and consumer groups, however, argue that the insurance industry should take a greater responsibility, noting property-and-casualty insurers realized a record profit of almost $60 billion in 2006. The Consumer Federation of America contends the reauthorization should cover only catastrophic attacks such as nuclear, biological, chemical or radiological attacks but should raise the trigger to cover claims that are more than $100 billion.