Helping to revive the focus of the federal government on terrorism risk insurance issues and the future potential for the insurance industry to provide adequate coverage to policy holders upon the expiration of the Terrorism Risk Insurance Extension Act (TRIEA), the President's Working Group on Financial Markets and the U.S. Government Accountability Office (GAO) each released a report on the issue. TRIEA is set to expire on December 31, 2007, and it remains unclear if a remodeled program will take its place upon expiration.
The President's Working Group report recognizes the difficulty in modeling for terrorism risk and identified concerns over chemical, nuclear, biological, and radiological (CNBR) risks, noting that: “Given the general reluctance of insurance companies to provide coverage for these types of risks, there may be little potential for future market development.”
The GAO report focused on the extent that risks associated with CNBR terrorist attacks are measurable and insurable by the private and public sectors, and concluded that the private insurance market would not be able to provide sufficient coverage to American businesses from such an attack.
Last week, the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises and the Subcommittee on Oversight and Investigations held a joint hearing on “Protecting Americans from Catastrophic Terrorism Risk.” Christopher J. Nassetta, CEO of Host Hotels & Resorts Inc., testified at the hearing on behalf of the Coalition to Insure Against Terrorism (CIAT), a policyholder coalition of which BOMA Intl. is a member. Nassetta urged Congress to begin work now on a long-term, public-private terrorism insurance solution.
This information was reprinted with permission from BOMA Intl., an association and source of information on office building development, leasing, building operating costs, energy consumption patterns, local and national building codes, legislation, occupancy statistics and technological developments. BOMA members collectively own or manage more than 9 billion square feet of office space, which represents more than 80 percent of the prime office space in North America. Additionally, the association has 10 overseas affiliates. To find out more, visit (www.boma.org).