Canadian Underwriter

U.S. congressional report backs government terror cover

May 3, 2002   by Canadian Underwriter

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A government role, albeit a limited one, is needed to ensure the availability of terrorism coverage, says a new report “The Economic Costs of Terrorism”, released by the U.S. Congress’ Joint Economic Committee (JEC).
“The short- and long-run costs of terrorism following the events of September 11 have yet to be comprehensively measured, but the long-term costs appear high enough to consider offsetting tax and insurance measures,” states a release from the JEC.
The report deals with broad economic impacts of terrorism, such as the need for corporations to increase security spending. Other economic issues could include travel delays, additional security checks and inspections, longer cross-border transfers, higher construction costs, higher shipping costs, more regulation, higher inventory levels, slower mail delivery, and similar items, and calls for potential tax relief in response to these issues.
But the report specifically focuses on the need for available insurance coverage, insurance that is reasonably affordable. “Efficiently functioning insurance markets are crucial for the economy. Without a federal partnership on terrorism insurance we are clearly going to see a loss of jobs,” says JEC member Congressman Phil English. “The federal government has an important role to play by ensuring the smooth operation of the markets in an area that is obviously beyond the capacity of the private sector.”
The report suggests the government needs to intervene on the issue, although private insurers must also be involved, potentially in a risk-sharing capacity.
Presently, Congress has passed a terrorism bill, but the Senate remains deadlocked, unable to resolve issues surrounding limiting tort access through the bill.

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