WASHINGTON (Oct. 17, 2007) – The National Association of Mutual Insurance Companies (NAMIC) issued the following statement in response to the Senate Banking Committee’s approval of legislation to extend the government’s terrorism insurance backstop program. The comments may be attributed to Marliss Browder, NAMIC’s senior federal affairs director.
NAMIC is pleased with the bill passed by the committee today. This is a common-sense solution that includes most of the top priorities NAMIC has identified as vital to ensuring that the majority of property/casualty insurers can continue to participate in the program. This will ultimately benefit consumers through more competition.
By eliminating the nuclear, biological, chemical, and radiological (NBCR) make-available provision, extending the program for seven years, removing the distinction between foreign and domestic terrorism attacks, and maintaining insurers’ copayments and deductible at existing levels, the committee members have demonstrated an appreciation of many issues critical to ensuring the continued success of this public/private partnership.
The elimination of the mandate for insurers that offer terrorism coverage to also make available insurance for non-conventional weapons (NBCR), a provision contained in the House-passed bill, goes a long way to ensuring greater participation by the nation’s medium-sized and smaller insurance companies, thus providing more competition and lower rates for consumers.
Our one area of significant concern is the continuation of the trigger level for federal involvement at $100 million. Too high a trigger would drive many insurers from the commercial market because of the extreme risk to their capital base. The event trigger must be set at a level that will assure continued participation by small- and medium-sized insurers, as this is key to their ability to continue to provide coverage. NAMIC believes that inclusion of the provision in the House bill to reduce the event trigger from $100 million to $50 million would assure the nation the maximum participation by property/casualty insurers of all sizes. We strongly urge Congress to include this provision in the final bill.
The committee added a provision that would mandate that the Government Accountability Office conduct two studies and make recommendations to the Congress. One study would examine the issue of NBCR risk, and the other study would examine capacity restraints in certain regions of the country, such as lower Manhattan.
We urge Congress to pass this much-needed legislation with the $50 million event trigger to ensure the continued participation of the majority of the property/casualty insurance industry.
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