FOR IMMEDIATE RELEASE
NY INSURANCE SUPERINTENDENT URGES CONTINUED FEDERAL SUPPORT FOR TERRORISM INSURANCE
The federal program to support private terrorism insurance is essential for New York and the nation and must be renewed, Acting New York State Insurance Superintendent Eric Dinallo testified to House hearings at City Hall today.
"Without the federal backstop provided by the Terrorism Risk Insurance Act (TRIA), we are asking underwriters to do the most difficult thing -- to price blind -- so the amount they would have to charge to cover all conceivable outcomes become prohibitively expensive. TRIA takes away the extremely expensive events, so it is possible for insurers to price," Dinallo said.
"There is a healthy skepticism about subsidies for fear that government assistance will encourage uneconomic behavior because then people do not have to consider the full cost of their actions. This is often called moral hazard. But that is not what is going on here. People living in dense cities and New York Citys status as the financial services capital of the world are good things. TRIA therefore is not rewarding or encouraging bad behavior it is simply permitting us to properly insure those who are living and engaging in work in a manner we choose to protect and reward. I therefore do not view TRIA as an unacceptable subsidy to the private sector. TRIA permits rational pricing and the fixing of a market failure. TRIA does not replace the private sector it makes the private sectors involvement possible."
The full text of Dinallos testimony is available on the State Insurance Department website, Testimony of the New York State Insurance Department - Regarding: Extension of a Terrorism Risk Insurance Program (PDF Format)