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FOR IMMEDIATE RELEASE
April 4,
2002
NORTON SAYS CANCELLATION OF INSURANCE COVERAGE
AND INCREASED PREMIUMS BECAUSE OF TERRORISM WILL NOT BE
TOLERATED
Washington, DC–Congresswoman Eleanor Holmes Norton (D-DC)
said today that threats to increase insurance premiums or
cancel coverage of D.C. businesses because of the possibility
of terrorism is "shameful, unacceptable, and unnecessary."
Reports of increased premiums and cancellations thus far have
been confined to anecdotal instances near the White House.
However, the Congresswoman said: "Swift action must be taken
now to ensure that such practices do not spread to other areas
of the District and to other cities and areas of the country.
There are distinctions based on types of insurance (commercial
liability and workers compensation, for example); however, as
the Oklahoma City bombing, Seattle Millennium attempt show, it
is far fetched to believe that any area of the country is more
or less vulnerable to terrorist attack." Although premiums in
some cases had been increasing prior to September 11 due to
market forces, the Congresswoman indicated that increased
premiums and cessation of coverage near terrorist targets,
"has a smell to it, and is unwarranted because 48 states and
the District currently allow insurance companies to exclude
acts of terrorism from coverage on commercial insurance
policies."
The Congresswoman said that she is working with the
District of Columbia Department of Insurance and Securities
Regulation (DISR), to determine whether terrorism is being
used by insurance companies as a pretext to raise rates. The
DISR has agreed to do a survey of D.C. businesses to determine
whether increases in premiums are widespread. The
Congresswoman is working with DISR because states and the
District, and not the federal government, regulate the
insurance industry. However, the Congresswoman supported a
version of the Terrorism Risk Protection Act, passed by the
House last November, allowing individual insurance companies
to receive federal aid for terrorism losses. The bill is now
pending in the Senate.
Norton said that since insurers may exclude coverage of
terrorism, she would write legislation barring redlining of
entire areas or cities because of the perception that they
might be terrorist targets, if necessary. "I would expect to
have many allies from big cities and small towns that would be
‘targeted’ for higher rates," she said. "Entire areas of our
country could be subject to pre-textual rate increases if we
don’t nip this in the bud."
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