Monday, 9 August 2010
Private Insurance Companies Need Government Help for Terrorism Insurance
Unfortunately, we live in a pretty unstable world these days and the threat of terrorism is all too real. The United States government has been told by the country’s insurance companies that terrorism risk insurance can’t be offered without their help.
According to Insurance News Net, the government introduced Terrorism Risk Insurance Act (TRIA) back in 2002 and hoped a private self-sustaining market would evolve. The program was then extended by seven years in 2007 and could be extended again before it expires.
Marliss McManus, who is a federal affairs director with the National Association of Mutual Insurance Companies, stated that while terrorism insurance is going to be needed, it can’t really be handled by private firms without the help of the feds. She told the government that it’s unlikely any private company will take on the task of terrorism insurance, especially when it comes to weapons of mass destruction.
J. Stephen Zielezienski, who is senior vice president of the American Insurance Association, agreed with her and said it’s doubtful the private market will take it on. In 2006, the government also found there is little potential interest for private terrorism risk insurance for nuclear, chemical radiological, and biological attacks and has found nothing has really changed in the last four years. Zielezienski added that a federal terrorism insurance program definitely needs government help along with the removal of specific regulations that are currently in place on private insurers.
The government looked to private insurers for explanations on terrorism risk insurance and at what it would cost. However, McManus said terrorism is so unpredictable that it’s hard for the private market to develop and to give an estimated cost for it.
