U.S. Department of Treasury’s Assessment of Terrorism Insurance Marketplace Criticized

Late last week, the Coalition to Insure Against Terrorism (CIAT) issued a statement by spokesperson Martin L. DePoy, vice president for government relations, National Association of Real Estate Investment Trusts. DePoy’s comments are in reaction to the U.S. Department of Treasury’s assessment of the Terrorism Risk Insurance Act (TRIA) of 2002 and the state of the terrorism insurance marketplace.

In the statement, DePoy claims that the Treasury’s study is flawed and denies the real risk of terrorism. According to CIAT and DePoy, the study asserts that the presence of reinsurers will grow stronger in the absence of a federal backstop. DePoy and others feel this argument defies logic. “Even Federal Reserve Chairman Alan Greenspan has questioned the ability of the private market alone to insure against terrorism,” DePoy’s statement reads.

TRIA’s value as a catalyst for economic rebound in the event of another 9/11 has been ignored. The statement explains: “Policyholders remain convinced that a federal terrorism insurance program of some kind must be in place next year to help protect the U.S. economy and American jobs. CIAT’s goal is a backstop that ensures there is an adequate supply of terrorism insurance while, at the same time, address[es] gaps in current coverage and creat[es] a system that maximizes the development of private risk capacity.”

Immediate action is being recommended, and CIAT hopes to reinforce to Congress the urgent nature of reopening this debate. To read the complete statement issued by CIAT, visit the organization’s website (www.insureagainstterrorism.org).