Why are lobbyists for the insurance and business community trying to get Congress to pass an extension of TRIA — a standby reinsurance facility, funded by taxpayer dollars at no initial cost to insurers — before the U.S. Treasury completes its mandated study?
It may be because they are afraid that the study will suggest revisions to TRIA that may, for instance, require an up front financial commitment by insurers to maintain the standby facility.
It may be because TRIA as designed is an odd way to provide catastrophic cover to primay carriers, lacking as it does any loss mitigation requirements, and even in more glaring instance in workers comp failing to cover terrorist related work injuries.
I work for an insurance company, and naturally, as a for-profit enterprise, insurance companies want the federal guarantee to continue as is. But I don’t believe that’s “fair”. I favor a reinurance fee, payable to whoever would handle TRIA. This fee would be no different from the reinsurance fees paid to “regular” insurers. Every insurance company would be in the same boat, all would have to pay the fee, and the fees could go into a fund to help offset a future loss. A catastrophe would still affect the reinsurer (the federal government), who’d have to pay out big money, but I think there’s ample reason why a service to commercial enterprises should cost those enterprises a fee as in the normal course of business. It would be naive to think that adding a new risk, or a newly recognized risk, to a policy would not increase prices. The fee would be part of that increase, which would also be the normal course of business.
Policies will be renewed or issued with expiration dates after the current projected sunset of TRIA. If TRIA isn’t renewed, how do insurers address the risk of terrorism that mate3rializes after the sunset date? Inusurers can’t initiate mid-term premium changes or impose exclusions. So, without TRIA, the industry has to take all the risk of an event which is inherently uninsurable. As we know from watching the asbestos fiasco, Congress can take forever to deal with important issues. It’s time to push for a renewal of TRIA now, not later.
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Why are lobbyists for the insurance and business community trying to get Congress to pass an extension of TRIA — a standby reinsurance facility, funded by taxpayer dollars at no initial cost to insurers — before the U.S. Treasury completes its mandated study?
It may be because they are afraid that the study will suggest revisions to TRIA that may, for instance, require an up front financial commitment by insurers to maintain the standby facility.
It may be because TRIA as designed is an odd way to provide catastrophic cover to primay carriers, lacking as it does any loss mitigation requirements, and even in more glaring instance in workers comp failing to cover terrorist related work injuries.
Why this panic?
I work for an insurance company, and naturally, as a for-profit enterprise, insurance companies want the federal guarantee to continue as is. But I don’t believe that’s “fair”. I favor a reinurance fee, payable to whoever would handle TRIA. This fee would be no different from the reinsurance fees paid to “regular” insurers. Every insurance company would be in the same boat, all would have to pay the fee, and the fees could go into a fund to help offset a future loss. A catastrophe would still affect the reinsurer (the federal government), who’d have to pay out big money, but I think there’s ample reason why a service to commercial enterprises should cost those enterprises a fee as in the normal course of business. It would be naive to think that adding a new risk, or a newly recognized risk, to a policy would not increase prices. The fee would be part of that increase, which would also be the normal course of business.
Policies will be renewed or issued with expiration dates after the current projected sunset of TRIA. If TRIA isn’t renewed, how do insurers address the risk of terrorism that mate3rializes after the sunset date? Inusurers can’t initiate mid-term premium changes or impose exclusions. So, without TRIA, the industry has to take all the risk of an event which is inherently uninsurable. As we know from watching the asbestos fiasco, Congress can take forever to deal with important issues. It’s time to push for a renewal of TRIA now, not later.