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Conning: Terrorism Insurance Act Does Not Solve Problems

New studies by Conning and Company say the Terrorism Risk Insurance Act of 2002 (TRIA) has done very little to address the fundamental issues that...
February 25, 2003

New studies by Conning and Company say the Terrorism Risk Insurance Act of 2002 (TRIA) has done very little to address the fundamental issues that make terrorism risk so difficult and unattractive to insure. "The placebo effect of passing this legislation is beginning to wear off," said Bruce Thomas, Vice President at Conning. "Although the Act does not harm insureds or insurers in any substantive way, businesses and insurers are starting to recognize how little it actually does to solve any of their problems."

Conning says that from the insured's perspective, the coverage mandated by TRIA does not address all losses that may arise from terrorism since it does not cover domestic terrorism or losses from nuclear, biological and chemical hazards. Also, many insureds still feel that the price of insurance is too high. For insurers, "While the Act will provide some capital relief in the event of another large-scale terrorist attack, it will not prevent insurers from becoming insolvent if their exposures are too concentrated," said Thomas.

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