US terrorism legislation up for debate
The US House of Representatives has introduced a bill that extends the current Terrorism Risk Insurance Extension Act, which is set to expire December 31.
The Insurance Information Institute (III) has welcomed the Terrorism Risk Insurance Revision and Extension Bill (TRIREA).
III President and Chief Economist Robert Hartwig says the proposed 10-year extension will not only protect businesses but it also addresses the potential ambiguity of domestic versus international terrorism acts.
“It should be particularly beneficial to the construction, commercial real estate, manufacturing, utility and transportation industries. Governments that own and operate critical infrastructure such as airports, ports and bridges will also benefit.”
However, Dr Hartwig expressed concern over the inclusion of a provision that would compel insurers to cover nuclear, biological, chemical and radiological (NBCR) risks.
“NBCR risks pose a unique threat which historically has not been covered by standard property/casualty insurance policies,” he said. “Insurers have little to no experience insuring against these risks, the magnitude of which can easily exceed the claims-paying resources of private insurers, even with TRIREA in place,” Dr Hartwig said.
He says the successful detonation of a nuclear device in Manhattan, for example, could result in losses in excess of $US750 billion ($884 billion). “A loss of this magnitude is nearly five times the claims-paying capacity of all property/casualty insurers for TRIREA-eligible lines of coverage.”
Dr Hartwig noted that total insured losses from the terrorist attack of 9/11 are estimated at $US35.9 billion ($42.3 billion) in 2006 dollars.
The Insurance Information Institute (III) has welcomed the Terrorism Risk Insurance Revision and Extension Bill (TRIREA).
III President and Chief Economist Robert Hartwig says the proposed 10-year extension will not only protect businesses but it also addresses the potential ambiguity of domestic versus international terrorism acts.
“It should be particularly beneficial to the construction, commercial real estate, manufacturing, utility and transportation industries. Governments that own and operate critical infrastructure such as airports, ports and bridges will also benefit.”
However, Dr Hartwig expressed concern over the inclusion of a provision that would compel insurers to cover nuclear, biological, chemical and radiological (NBCR) risks.
“NBCR risks pose a unique threat which historically has not been covered by standard property/casualty insurance policies,” he said. “Insurers have little to no experience insuring against these risks, the magnitude of which can easily exceed the claims-paying resources of private insurers, even with TRIREA in place,” Dr Hartwig said.
He says the successful detonation of a nuclear device in Manhattan, for example, could result in losses in excess of $US750 billion ($884 billion). “A loss of this magnitude is nearly five times the claims-paying capacity of all property/casualty insurers for TRIREA-eligible lines of coverage.”
Dr Hartwig noted that total insured losses from the terrorist attack of 9/11 are estimated at $US35.9 billion ($42.3 billion) in 2006 dollars.