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Thursday, October 25, 2001
 
U.S. Chamber Calls For Congressional Help to Avoid Insurance Fallout from Potential Future Terror Attacks

WASHINGTON, D.C. – The United States Chamber of Commerce today called for lawmakers on Capitol Hill to step in to prevent a crisis in terrorism insurance availability in the event of another strike against the country.

 

The Chamber warned that while the insurance industry remains committed to meeting its obligations to policyholders as a result of the September 11 attacks, the heightened risk of future attacks is undermining primary insurers’ and reinsurers’ ability to provide adequate future coverage.

 

“The attacks of September 11 will result in the largest insured loss in the history of this country,” said Thomas Donohue, Chamber president and CEO, testifying before the Senate Banking Committee.  “With estimated losses of upwards of $50 billion, the potentially astronomical liability of future attacks has put the industry at risk of not being able to cover future losses associated with terrorism.”

 

The U.S. and global reinsurance industry does not have the capacity to provide protection against another attack, according to the Chamber.  Many reinsurers have indicated that they plan to sharply reduce or eliminate coverage on potential terror targets such as office towers, transportation hubs, sports arenas and aviation infrastructure.  Primary insurers, not able to shoulder the burden of full coverage for such entities, would be forced to similarly limit coverage as well.  As a result, a majority of U.S. businesses could be left without terrorism insurance by year’s end.

 

“This ripple effect of coverage cuts could have a profound and widespread effect on the growth of the American economy,” continued Donohue.  “Bank loans for major construction project undertakings such as new power plants, pipelines and commercial office space would sharply decrease without coverage.”

 

The Chamber has called for a partnership between the Administration, Congress and the business community to develop and implement a temporary federal financial backstop for terrorism exposure before the end of this year’s congressional session.  Without such a partnership, the impending constriction in the insurance and reinsurance markets poses the threat of serious injury to the U.S. economy.

 

The U.S. Chamber of Commerce is the world’s largest business federation representing more than three million businesses of every size, sector and region.

 

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