Products and Services

Rand Study Says U.S. Terrorism Insurance System Falling Short
The terrorism insurance system in the United States is failing to provide businesses with adequate financial protection, leaving the nation vulnerable to economic disruption if there is a major terrorist attack, according to a RAND Corporation study. The report by the RAND Center for Terrorist Risk Management Policy (CTRMP) says the terrorism insurance system is not robust enough to respond to a rapidly evolving terrorist threat against U.S. businesses. The study points out that terrorism insurance does not cover losses caused by attacks from domestic terrorist groups. In addition, it says most insurance polices now exclude coverage for attacks involving chemical, biological, radiological and nuclear (CBRN) weapons. On top of this, many of the nation’s businesses are not buying terrorism insurance that became available after the Sept. 11, 2001 terrorists attacks, increasing the economic damage that would be caused by a new terrorist strike on the United States, the study finds. The report recommends that the U.S. Congress consider proposals to increase the number of businesses buying terrorism insurance by lowering its price. It says this could be done without increasing costs to taxpayers by changing the terms of federal reinsurance.

The report also says Congress should consider:

Expanding and improving the financial protections offered by Terrorism Risk Insurance Act (TRIA), instead of allowing the law to expire as scheduled in December.
Requiring that terrorism insurance cover acts by domestic groups and attacks involving CBRN. Researchers acknowledged that the latter poses a challenge that may be most appropriately covered through a direct government insurance program.
Creating a national board of governors that can assess the performance of TRIA or its successor.

In addition, the report points out that al Qaeda has shown increased interest in launching attacks designed to cause mass disruption and economic harm, magnifying the importance of private sector targets. One scenario with the potential for devastating uninsured losses that was highlighted in the report was an attack with a so-called “dirty-bomb” – an explosive device that disburses radioactive material. The RAND report warns that the United States still faces a potent threat from al Qaeda, despite significant efforts that have been made since the 2001 terrorist attacks to disrupt and weaken the group. In addition, some U.S. extremist groups continue to pose threats. To order a copy of “Trends in Terrorism: Threats to the United States and the Future of the Terrorism Risk Insurance Act,” visit the Rand website.

CLAIMSCHOOL Offers Computer Based Fraud Training
ClaimSchool, a provider of educational materials and services for the insurance professional announces the availability of a Computer Based Training (CBT) program for insurer integral anti-fraud personnel. The training program was written by Barry Zalma, Esq., CFE. “California Code of Regulations Section 2698.40 et seq requires that all integral anti-fraud personnel are trained annually and all new hires are trained within 30 days of hiring. Without a CBT course, providing this training would be too expensive and logistically impossible,” said Barry Zalma, a California attorney and president of ClaimSchool, Inc. “The California Department of Insurance is auditing insurers seeking proof of compliance with the regulations.” For more information, visit www.zalma.com.

Free Tip Sheet Helps Improve Reservation of Rights Letters
Of all the letters that claims professionals write, none is harder to make friendly than the reservation of rights letter. The Communication Workshop has just released a free tip sheet that offers eight helpful ideas on improving reservation of rights letters. According to Gary Blake, author of the tip sheet, “Although reservation of rights letters are meant to protect you, they are filled with phrases that could be made friendlier, lighter and more customer-oriented. My tip sheet tries to coalesce some of what I’ve learned about organizing, phrasing and formatting reservation of rights letters so that they are neither overly legalistic nor absurdly stodgy.” For your free copy of “Eight Tips on Writing An Effective Reservation of Rights Letter,” or for information about Dr. Blake’s claims- writing seminars, e-mail garyblake@aol.com, call (516) 767-9590 or visit his website at www.writingworkshop.com.

New Insurance Designation offered by SITE
The Board of Directors of the Society of Insurance Trainers & Educators (SITE) is pleased to announce the creation of The Insurance Training Professional (ITP) designation. The new designation was created with member input and recognizes excellence in professional trainers. The designation recently announced to the SITE membership requires both training and insurance experience/ knowledge. In announcing the new designation, SITE President Beth Gamble Riggins, CPCU, AIC, AAI, AIS, said: “This designation is designed to recognize the professionalism of insurance trainers. It includes a requirement for insurance knowledge, either through insurance designations or education, or through experience. It also requires a minimum of five years’ training experience and training knowledge as evidenced through study or other course work.” For more information, please visit www.insurancetrainers.org or e-mail ed@insurancetrainers.org.

Insuring Against Certain Risks Requires Government Participation, Concludes NAMIC Report - Terrorism Risk is Prime Example
Even in a robust private insurance market, certain types of “extreme” risk can only be insured with government assistance, according to a NAMIC Issue Analysis entitled “Insuring the Uninsurable: Private Insurance Markets and Government Intervention in Cases of Extreme Risk.” Within this narrow category, no risk is more problematic than that associated with terrorism, observes author Sophie Korczyk, Ph.D. Indeed, terrorism combines the potential loss magnitude of a large-scale natural disaster with the unpredictability of a single intentional act. “This feature itself may make terrorism an inherently uninsurable risk,” Korczyk concludes. “Some have suggested that TRIA’s non-renewal would have the salutary effect of causing insurers and commercial property owners to invest in protective measures that would mitigate terrorism risk,” said NAMIC Public Policy Director Robert Detlefsen. “But even if sophisticated terrorism protection measures could be developed and put in place, there is no guarantee they would be effective. Unlike hurricanes and earthquakes, terrorists can respond to changes in the environment by altering their tactics and selecting more vulnerable targets.” Nevertheless, property owners, primary insurers, reinsurers, and government policymakers should continue to search for possible alternatives to the government reinsurance program established under TRIA. “In the end, however, some form of government-funded terrorism insurance – perhaps in concert with private sector initiatives such as catastrophic terrorism bonds, tax deferred reserves dedicated exclusively to terrorism loss indemnification and terrorism risk pooling arrangements – will be necessary to provide Americans with effective and affordable coverage for this most extraordinary risk,” said Detlefsen. To download the analysis, visit www.namic.org/pdf/05NAMICExtremeRisk.pdf.

A. Central Insurance Company Implements Insuresoft’s Web Portal Product
Insuresoft announced that A. Central Insurance Company, a wholly owned subsidiary of New York Central Mutual Insurance Company, has implemented Insuresoft’s web portal product. This product allows agent quoting for A. Central’s personal automobile insurance product in New York. This product is a supplement of Insuresoft’s Diamond System. This product utilizes web services to provide processing capabilities inherent in the Diamond System to A. Central Insurance Agents. For more information about Insuresoft, visit www.insuresoft.com/home.htm.

AQS®, Inc. Presented with ACORD Certification Award
AQS, Inc., a leading provider of commercial policy administration solutions to the property/casualty insurance industry, received the ACORD Certification award for property and casualty surety XML during the ACORD LOMA Insurance Systems Forum. The Certification award recognizes companies that are keeping their systems synchronized with the latest release of electronic standards for the insurance industry as defined by ACORD. There were 11 Certification awards presented and AQS was one of three property/casualty solution providers to receive one. AQS received the award for its integration tool, AQS/advantage™ Integrator. For more information, visit www.aqsadvantage.com.

Posted: Friday, August 19, 2005 12:00:00 AM. Modified: Friday, August 19, 2005 4:09:29 PM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.