BIG “I” BELIEVES TREASURY ANALYSIS REFLECTS NEED FOR FEDERAL ROLE IN TERRORISM INSURANCE
Association disagrees with a number of report’s specifics but will work for federal backstop
WASHINGTON, D.C., June 30, 2005—The Independent Insurance Agents & Brokers of America (Big “I”) today expressed both cautious optimism and concern over Administration comments regarding a federal backstop for terrorism insurance.
The Terrorism Risk Insurance Act (TRIA) is set to expire Dec. 31, and Congress has been waiting for the results of a Treasury Department study before deciding whether to renew it. The Treasury analysis was released today.
The Big “I” commends the Administration for issuing the comments on time and is cautiously optimistic yet concerned about the statement’s tone, in which the Administration laid down parameters within which renewed legislation should fall.
“We applaud the Administration and Congress for putting TRIA in place after the horrific attacks of 9/11 in order to stabilize the insurance market before the worst effects of the availability and affordability crisis further injured our economy,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs and federal relations. “President Bush and Congress were correct in supporting a federal backstop for terrorism insurance when it was first proposed, and we look forward to continuing our work with policymakers as they grapple with this very important issue once again with expiration of the current TRIA program looming.”
“Agents and brokers serve as valuable professional trusted advisors between consumers and insurers, and we believe that the Administration’s comments suggest that there is an appropriate federal role to ensure a workable insurance marketplace in the event of terrorism losses,” Symington adds. “However, some of the Treasury conclusions may be more wishful thinking than business reality. We must ensure that we have markets for our business customers.”
With the risk of catastrophic attacks on U.S. soil still very real, and the capability of both insurers and reinsurers to offer comprehensive terrorism coverage for an uninsurable risk still very limited, the Big “I” continues to push for the extension of a federal backstop by Congress.
The Big “I” has consistently supported the continuation of the current terrorism insurance backstop or a modified one, and it has noted in testimony before Congress that action is needed as soon as possible, since businesses and insurers are starting to make decisions that impact operations beyond the expiration of TRIA.
The Big “I” also notes that the availability and affordability of terrorism insurance is a business customer problem throughout the nation. In fact, take-up rates under TRIA have continued to grow across the country, and IIABA members have seen terrorism coverage purchased by a variety of interests, from small towns in Mississippi to small and large businesses in New York City. IIABA does not want its business customers to be in a position of having insurers exclude terrorism coverage, or having insurers stop writing certain commercial coverages altogether in some states that do not allow exclusions for terrorism coverage. IIABA’s focus is on its customers, and it knows that many of its business customers need this coverage.
“The Big ‘I’ and our 300,000 insurance agents and brokers hope that policymakers will draw on the experiences of the current program in crafting a mechanism that will better serve consumers and protect our economic security, and we urge members of Congress to move forward now and pass legislation to ensure a federal backstop for acts of terrorism,” says Brendan Reilly, Big “I” director of federal government affairs.
The Big “I” acknowledges the thorough work of the Treasury Department in issuing its study.
“While we disagree with a number of the conclusions in the report, we believe the Treasury Department’s analysis indicates that there is a role for the federal government to play in the terrorism insurance marketplace to ensure the availability of adequate levels of insurance to allow businesses across America to continue operating and growing, and preserving jobs in the process. We agree that TRIA has been effective in stabilizing the insurance marketplace following 9-11 and urge the Administration and Congress to extend a federal backstop promptly as the marketplace has not fully recovered,” Symington says.
Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.
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