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| | Pre-Terrorism Insurance Legislation Chatter By Robert Warne - November 18, 2002It didn’t happen overnight, but it looks like the federal government will soon have carriers’ backs as-well-as policyholders’. So how will the Terrorism Risk Insurance Act of 2002 impact the commercial insurance industry when the Senate approves the version of the legislation the House passed Nov. 14?
It is expected that once the bill becomes law, in states where terrorism exclusions exist, they would be nullified. Insurers would then be left with terrorism risk in their laps until they can re-price and revise coverage accordingly for their customers.
The Wall Street Journal though has reported the transition may not be as simple as passing a bill. The paper cites that even though the coverage will be available, companies that are still digesting recent rate increases may not be ready to pay more right away.
But for workers’ compensation carriers, passage is welcomed with open arms because for the most part, they have no choice in assuming terrorism risk.
The passage of the legislation comes after yearlong push for a federal backstop by President George W. Bush, insurers, and a coalition of 66 companies and trade groups.
The Bush administration believes the bill’s passage will fire up the economy with $15 billion in construction projects and 300,000 related jobs that are currently in limbo because of a lack of insurance.
The main sticking point for passage of a terrorism insurance backstop bill had been over lawsuit restrictions.
But with assurances from the White House that it would pursue tort reform changes next year in exchange for support on the terrorism insurance legislation it looks like 2002 legislation will become a reality in 2002 and that all future terrorism claims will be paid in full. |