I.I.I. Says Industry Can’t Handle Terrorism Losses Alone

Institute says rise of ISIL shows need for government-backed safety net

The uncertain future of America’s terrorism insurance safety net is creating capacity and pricing issues, according to the Insurance Information Institute.

Dr. Robert Hartwig, president of the III, calls the Terrorism Risk Insurance Program Reauthorization Act a “critical component of the country’s national economic security infrastructure,” claiming that the rise of the Islamic State of Iraq and the Levant shows “that the need for the program is greater than at any time in the past several years.”

Read: Retail and Transport Sectors Face Highest Risk of Terrorism

Hartwig notes that, in the absence of TRIPRA, terrorism risk insurance would be less available to businesses of all sizes who want, and need, these policies. “Without the federal government’s insistence that insurers make terrorism coverage available to all who want it, terrorism risk insurance policies will be more costly and/or limited in scope.”

“The availability and pricing of terrorism insurance is currently tightening given uncertainty over reauthorization, and because of the unique nature of terrorism risk and the possibility for virtually unlimited losses, private insurance markets do not have the capacity to cover terrorism losses to the extent possible under TRIPRA.”

Read: Demand for Terrorism Insurance Strong, But TRIPRA Needed

The III’s warning comes as pundits debate whether ISIL poses a legitimate threat to the United States, and ahead of President Obama’s address to the country, where he is expected to authorize airstrikes on the group in Syria.

Hartwig also says TRIPRA is sound fiscal and economic policy. “TRIPRA costs taxpayers virtually nothing, yet it continues to provide tangible benefits to the U.S. economy in the form of terrorism insurance market stability, affordability and availability.”

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