Members of the Risk and Insurance Management Society Inc. (RIMS) say they are disappointed that the U.S. Senate didn''t address the issue of federal terrorism reinsurance legislation before the end of 2001.
The Jan. 1, 2002 renewal date for most property/casualty policies required immediate action by the Senate, according to the group. RIMS member companies are experiencing terrorism exclusions in their policies, as South Dakota, Colorado, Idaho and Massachusetts already approved terrorism exclusions for insurers.
"The Senate dropped the ball," says David Mair, RIMS president and associate director of risk management, United States Olympic Committee. "This is an issue for the economy and for policy holders, and this inaction will significantly impact the ability of businesses to obtain adequate insurance. We''ve already seen a drastic rise in costs, sharply diminished limits, withdrawal of coverage, and notice of non-renewal in order to add terrorism exclusion."
He added that Congress has left the infrastructure of the risk and insurance industry "too deeply damaged to be able to withstand another catastrophic incident." He says he hopes that Congress will address the regional politics and the tort-law provisions swiftly, so all policy holders will not suffer in the meantime.
Over time, lack of a federal reinsurance program will considerably impact the U.S. economy, according to RIMS. It is an economy already struggling to recover from recession. Rapidly rising coverage costs will continue, as the actual insurance coverage will probably shrink.
RIMS serves some 8,000 risk management professionals, who represent 84 percent of the Fortune 500 companies and approximately 950 small employers.
by Sandy Smith ([email protected])