Additionally, the association will remain actively involved in ongoing discussions of the terrorism insurance issue. A number of government studies will take place as part of the recently passed extension of the Terrorism Risk Insurance Act (TRIA), including: availability and affordability of terrorism insurance; insurance market capacity for coverage of attacks by nuclear, biological, chemical, and radiological (NBCR) weapons of mass destruction; and a “reset” provision creating lower deductibles for areas previously attacked by terrorists. Rep. Gary Ackerman (D-N.Y.) has pledged to pursue a broader TRIA bill in 2008. PCI will work diligently to support most of the reforms it is believed that he will propose, but will endeavor to block any move to add an onerous “make available” provision for NBCR coverage to the program.
“While we won a great victory in 2007 when Congress passed a long-term TRIA extension, our work on this important issue is not finished,” said David A. Sampson, PCI’s president and CEO. “In particular, the issue of an NBCR mandate has not disappeared, and we must continue to make our case that attacks by weapons of mass destruction are uninsurable. PCI members believe that it would be a risky burden both for insurers—particularly small- to mid-sized companies—and policyholders to expand the program and require companies to offer NBCR coverage to their policyholders.”
Regarding the flood issue, there is urgency because the NFIP is set to expire on Sept. 30, 2008. The House of Representatives passed a renewal bill, H.R. 3121, on Sept. 27, 2007, by a vote of 263-146. PCI opposes this bill because it contains a provision that would add wind coverage to the NFIP. PCI supports the Senate bill, S. 2284, which would not add wind coverage to the NFIP. This bill, which would provide mitigation grants, address repetitive-loss properties, and create additional federal funding for updated flood maps, passed the Senate Banking Committee Oct. 17, 2007, but is currently under a hold by Sen. David Vitter (R-La.).
PCI believes that, while the inclusion of wind coverage within the National Flood Insurance Program (NFIP) is well-intentioned, it may produce unintended negative consequences for millions of American insurance consumers. The association reiterates its support for a comprehensive public policy solution that supports private market initiatives, stronger building codes and land use regulations—backed up, where needed, by state catastrophe funds and limited, high-level federal financial support for responsibly managed state funds.
“Our concern is that the addition of wind coverage will create artificial subsidies, essentially causing rate hikes for consumers in non-coastal parts of the country who do not face the same wind-damage risks as coastal policyholders,” Sampson said. “It is unnecessary for Congress to expand the flood program, because wind coverage is already available either through the private sector or state wind insurance programs. It would be redundant to have a government program competing with coverage that already exists.”
The combination of homeowners’ insurance coverage, state wind pools and flood coverage available through the National Flood Insurance Program (NFIP) already provides consumers protection from wind and water damage. Moreover, the current system provides consumers the opportunity to purchase coverage at a price that reflects the risk based on the location of the property and the likelihood of a loss.
In 2008, PCI also will continue to work for Senate passage of the Nonadmitted and Reinsuran