November 20, 2001 by Canadian Underwriter
With the arrival of the U.S. Thanksgiving weekend, concern is growing over when legislation creating a government-backed terrorism pool will be returned by Congress. The National Association of Professional Insurance Agents (PIA) is adding its voice to the concerns, calling on Congress to pass the bill when it resumes after the holiday.
The bill will provide “stop-gap” reinsurance backing for primary p&c companies to allow them to write terrorism coverage in their policies. PIA says the cover is needed now, as most commercial policies come up for renewal before yearend.
PIA makes reference to a Wall Street Journal story that suggests some insurers are already sending out cancellation notices to their corporate clients.
“The market condition reports from PIA members are clear — the longer Congress fails to act, the worse this burgeoning insurance coverage crisis will become,” says Gary W. Eberhart, executive vice president of PIA.
“Without reinsurance for terrorism exposures, our direct carriers’ capital to commit to risk is severely limited,” adds PIA’s director of federal affairs, Pete Bizzozero. “Our message to Congress is clear: If you think you have until the end of the year to pass a bill, you do not. Your constituents are getting non-renewal and/or cancellation notices now. Because of the critical nature of the timing on this, the House and Senate need to pass bills and let conferees work out the specifics to a final product before Christmas.”
PIA adds it call for urgency to other groups, including the National Association of Insurance Commissioners (NAIC), at the same time that the Insurance Services Office is asking state regulators to allow insurers to exclude terrorism coverage from their policies.
“Insurers are now issuing notices of non-renewal and filing across-the-board property/casualty exclusions for terrorism risk,” says NAIC president Kathleen Sebelius. “These policy exclusions hold real consequences for the insurance-buying public in communities untouched by terrorist acts and related losses. This is occurring nationally, and state regulators are considering ways to ensure consumers remain protected without requiring insurers to assume unmanageable risks.”