WASHINGTON, D.C., April 17, 2014-Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), today issued a statement in response to the issuance of the President`s Working Group on Financial Markets` report to Congress on the "Long-Term Availability and Affordability of Insurance for Terrorism Risk." The report, pursuant to section 108 (e) of the Terrorism Risk Insurance Act (TRIA), requires the President`s Working Group to perform an ongoing analysis of the terrorism risk insurance marketplace and submit a statutory report to Congress.
Ms. Pusey`s statement follows:
"The report confirms that the private market alone does not have the capacity to provide the levels of terrorism risk coverage currently produced under TRIA. The partnership created by TRIA has enabled a private market to exist that has provided the certainty and capacity needed while also protecting taxpayer interests.
"Terrorism remains a unique and uninsurable risk that can only be covered through the public-private partnership offered by TRIA. The program has worked as intended. Its purpose was to stabilize the market, ensure that private sector terrorism coverage would be widely available, and provide for an orderly recovery in the event of future catastrophic losses.
"While we are encouraged by the report, we are concerned with any effort to increase insurer retentions as this could lead to decreased market capacity. The private sector has not developed the financial ability, and the significant levels of capital to create the necessary capacity to cover large-scale losses that result from a terrorist attack. With private reinsurance capacity of just $6-8 billion and approximately $34 billion in exposure retained by insurers that write terrorism coverage, there remains a significant gap in private reinsurance capacity to handle the peril.
"AIA is working hard to ensure that TRIA is reauthorized prior to its year-end expiration so that the program may continue to protect our nation`s economic interests from terrorism."
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Source: American Insurance Association via GlobeNewswire
- American Insurance Association
- Terrorism Risk Insurance Act