FOR IMMEDIATE RELEASE
MILLS: FEDERAL ROLE IN TERRORISM INSURANCE STILL NEEDED
Washington, D.C.--Superintendent Howard Mills urged a U.S. House of Representatives subcommittee today to enact legislation that would ensure the continued affordability and availability of terrorism insurance coverage even after the Terrorism Risk Insurance Act (TRIA) expires on Dec. 31, 2005.
"Given the looming expiration of TRIA, the current lack of a free market solution to the terrorism exposure, and the negative economic consequences that will ensue without the existence of a federal backstop, both my fellow regulators at the National Association of Insurance Commissioners and I believe that immediate action must be taken to ensure that this essential economic protection remains in place without any gap in coverage," Superintendent Mills stated, in testimony before the House subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.
Passed by Congress and signed into law by President Bush in 2002, TRIAs intent was to ensure the affordability and availability of commercial property and casualty insurance coverage for losses resulting from certain acts of terrorism while the private sector built sufficient capacity. TRIA, which is administered by the U.S. Treasury Department, provides for a sharing of terrorism losses between insurers and the Federal Government after satisfaction of an insurance company deductible.
"If a federal backstop is not in place on January 1, 2006, we may revisit some of the same market disruptions and economic uncertainties that we faced in the aftermath of September 11thespecially since the private market currently does not have the means to appropriately address this exposure," Superintendent Mills said. "In particular, businesses viewed by insurers as having a greater risk of terrorism losses, such as those located in Americas financial and commercial centers, may have trouble finding terrorism insurance."
The complete text of the Superintendents testimony can be found on-line at: http://www.ins.state.ny.us, under the News icon.