Swiss Re and Lloyd’s are urging the federal government to extend its terrorism risk insurance program, saying the private insurance market does not have adequate capital to cover the risk of terrorist attacks. They warned that the current federal terrorism risk insurance program is underpinning the market, and ending the program would likely substantially limit private market capacity for terrorism risk coverage. Lloyd’s officials said in a letter to the President’s Working Group (PWG) on Financial Markets, “In the long term, it is unlikely that the stand-alone terrorism market will have the capacity, or risk appetite, to step in should the Terrorism Risk Insurance Act (TRIA) be allowed to expire in 2014.” The carriers added that adding that terrorism risk “continues to be extremely hard to quantify, making the federal government backstop an absolute necessity to a healthy functioning market.” The letters were sent in response to a request by Treasury for views on its proposal to reduce the potential exposure of the government to a terrorist event. Treasury also asked for views on what would happen if the program were allowed to expire when the current authorizing legislation ends in 2014.

Click here to read "Swiss Re, Lloyd’s Weigh In On TRIA" (National Underwriter 8/26/10)

August 31, 2010