March 1, 2002—Business leaders across many industry sectors are uniting to voice the dire need for affordable and comprehensive terrorism insurance. Since September 11th, terrorism insurance has been hard to come by, and the policies that are available, say property owners, are too expensive and offer too little coverage.
Owners of high-rise properties in large cities say without adequate terrorism insurance they could face unmanageable losses and default on their mortgages, sending financial ripples throughout the economy.
The Coalition to Insure Against Terrorism, founded by the National Association of Real Estate Investment Trusts, (NAREIT) submitted a letter to Senate Leaders Tom Daschle and Trent Lott, which stated, “Those few insurance companies which continue to offer terror insurance today provide an inherently defective, incomplete and all too expensive product. Importantly, biological, chemical and radiological incidents—the very type that we are warned about and which you recently experienced—are left totally uncovered.” Other members of the coalition include the National Retail Association, the National Association of Industrial and Office Properties, the National Association of Manufacturers National Association of Realtors, to name a few.
A terrorism insurance bill that would provide federal assistance to the insurance industry HR 3210, passed the U.S. House of Representatives late last year and is currently before the Senate where action is pending. Although terrorism insurance is a high priority among both Democrats and Republicans, coming to terms on the specifics of the federal assistance has stalled any legislation from making its way to the White House. Issues that are currently being debated include the amount of coverage provided by the insurance companies, and whether any federal assistance would have to be paid back.
In remarks before the House Financial Services Committee, representatives from NAIOP stated, “The real estate industry is a leading pillar of the U.S. Without adequate insurance, it will be difficult, if not impossible to operate or acquire properties, refinance loans, or sell commercial mortgage-backed securities (of which $350 billion is currently outstanding). Disappearance of coverage for terrorist acts could severely disrupt the U.S.economy.”
For more information, access the General Accounting Offices report No. GAO-02-472T, “Terrorism Insurance: Rising Uninsured Exposure to Attacks Heightens Potential Economic Vulnerabilities.”
